In a report published Tuesday, Goldman Sachs analyst Greg Dunham downgraded LifeLock LOCK from Buy to Neutral and lowered the price target from $25.00 to $12.50, following the report that its Wallet mobile app is not fully PCI-compliant.
The analyst removed LifeLock from Americas Buy List on conservative assumptions of customer acquisition and churn.
Dunham remarked that LifeLock has a “strong, differentiated product” and believes the company will maintain its leadership in the identity theft protection space. Despite long-term optimism, the analyst expected the mobile app to acquire users with the potential for higher churn.
He wrote, “We believe that the strong FCF may provide some limit to downside at this valuation (currently trading at 9.8x 2015 FCF). We believe however, that recent deterioration in investor sentiment around the name could limit upside as well, pending resolution of this PCI non-compliance issue, and resolution of other overhangs (FTC order, whistleblower lawsuits, etc.).”
Goldman Sachs lowered estimates on 2014, 2015 and 2019 non-GAAP estimates from $0.46, $0.71 and $0.95 to $0.44, $0.63 and $0.78, respectively.
Shares of LifeLock fell almost 19 percent on Monday. The stock is currently trading at $10.48, down over two percent for the day.
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