DILLON READ CUTS RATING ON LIMITED

NEW YORK — Dillon, Read & Co. has lowered its rating on The Limited Inc. stock to a “hold” from “outperform” and lowered its estimates for the fourth quarter and for next year.
Peter Schaeffer, retail analyst at Dillon Read, has cut his estimates for this year to $1.03 from $1.08, compared with $1.25 in 1994. For l996, he cut his estimates to $1.20 from $1.30.
Schaeffer said he downgraded the stock principally because Limited, at an analysts’ meeting Wednesday, indicated that it was reconsidering its plan to pay a special cash dividend of $5 or $6 a share to shareholders.
This dividend would reflect the spinoff and public offering of Intimate Brands, the new company that now operates the Victoria’s Secret and Bath & Body Works divisions, among other businesses.
Instead of the cash dividend, Limited told analysts, it is considering a buyback of Limited stock.
According to Schaeffer, the cash dividend would, in effect, reduce the price of Limited stock to about $12 to $13 a share, a good value. However, the value of a stock buyback is difficult to quantify, Schaeffer said.
Limited stock closed Wednesday at 17, down 5/8, on the New York Stock Exchange.

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