UPDATE: D.A. Davidson Reiterates Buy Rating, Raises PT on Skullcandy on High Quality Growth Drivers

In a report published Thursday, D.A. Davidson analyst Andrew Burns reiterated a Buy rating on

, and raised the price target from $10.00 to $12.00. In the report, D.A. Davidson noted, “3Q results exceed consensus estimates. SKUL reported revenue and EPS of $58.1 million and $0.07, in excess of consensus expectations of $54.1 million and $0.04, and our estimates of $54.0 million and $0.04. Revenue increased 16.1% year-over-year (y/y), driven by 18.8% growth in Domestic and 11.1% growth in International. Guidance called for 7%-9% revenue growth (~$53.5-$54.5 million) and EPS of $0.02-$0.05. Gross margin ticked up 48bp to 45.3%, reflecting favorable return rates and on-plan product margin performance. SG&A grew 8.7% to $22.7 million (39.2% of sales vs. 41.8% in 3Q13), driven by higher personnel expenses, demand creation, and third-party sales commissions. Inventory exiting the quarter was up 32% y/y reflecting new product lines, planned 4Q shipments, and holiday replenishment stock.” Skullcandy closed on Wednesday at $8.89.