The fall of Sears Holdings Corp. (NASDAQ: SHLD) is on the verge of becoming a no-win scenario. Nothing that the company tries seems to work. Its guidance was so bad that we even pointed out that if Sears managed to become cool again somehow, then it might mean that being cool is not cool anymore. Now we have one of the few analysts that covers Sears out with very cautious comments.

Credit Suisse maintained its Underperform rating. What stands out the most is its price target of $20 for the stock. Sears closed at $36.71 on Friday, so this is a prediction of even more carnage yet to come. The firm’s Gary Balter believes that this situation is getting serious, with fewer and fewer options available to Eddie Lampert and his team.

Balter pointed out that earnings continue to shock on the downside, with each quarter seemingly worse than the previous one. He said that Sears has turned its operations into a $1.2 billion negative cash flow story in 2013. Balter even pointed out that Sears passes off its good locations and its profitable segments, while losing market share to stronger retailers in its core franchises.

Balter’s fear is that “the hope of this disaster turning around becomes remote.” Credit Suisse has now lowered its estimates as follows (new EPS versus prior EPS target at the firm):

• 2013: -$8.25 vs. -$6.05
• 2014: -$6.84 vs. -$4.78
• 2015: -$4.94 vs. -$4.72

What is ironic in the report is that what protects Sears from vendors shutting them down is the company’s large size. The current dilemma is that as long as Sears still pays the bills, the vendors will take the risk of shipping products to them.

Things could get even worse than the $20 target. Gary Balter said in the report, “The bulls on the stock continue to point to the underlying assets, but by continuing to operate, Sears is reducing that value now by nearly an astonishing $10 to $14 a share per year.”

The company’s reducing inventory and selling off assets just leads to a spiral of lower results. Sears Canada is believed to be challenged. In the United States, management is taking profitable chunks of the operations away and refusing to invest in store infrastructure, leading to significant market share losses.

Sears now trades at $36.60, and the new 52-week range after last week’s disaster is $35.50 to $67.50. Another hard figure to imagine is that Sears is now worth only about $3.9 billion in market cap.

To the next hedge fund guru who wants to run a floundering retail empire, STICK TO THE HEDGE FUND BUSINESS!

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