UPDATE: Piper Jaffray Downgrades Skullcandy to Neutral on Competition and Margin Concerns

Piper Jaffray downgraded Skullcandy

from Overweight to Neutral and lowered the price target from $15.00 to $7.00. Piper Jaffray noted, "We are downgrading shares of SKUL from Overweight to Neutral and reducing our price target from $15 to $7 as we believe heightened competition, potential for further margin reductions and a lack of near-term catalysts will continue to weigh on EPS estimates and the earnings multiple. The headphone category remains highly competitive and the Skullcandy brand does not appear to be gaining or maintaining share at key domestic retailers, and when coupled with the potential for industry consolidation causing higher discounting, results in a downward bias to our estimates. We see limited downside in SKUL shares at this time given low valuation and negative sentiment, but we would wait for signs of stabilization before initiating or increasing positions." Skullcandy closed at $6.84 on Thursday.