UPDATE: D.A. Davidson Reiterates Buy Rating, Raises PT on Skullcandy Inc. as Holiday Reset Drives 4Q Upside

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In a report published Friday, D.A. Davidson analyst Andrew Burns reiterated a Buy rating on
Skullcandy Inc.SKUL
, and raised the price target from $12.00 to $14.00. In the report, D.A. Davidson noted, "SKUL reported revenue and EPS of $96.8 million and $0.26, in excess of consensus expectations of $82.3 million and $0.24, and our estimates of $82.4 million and $0.25. Revenue increased 34% year-over-year (y/y), driven by 37% growth in Domestic and 27% growth in International. Guidance called for 12%-14% revenue growth (~$80.9-$82.4 million), gross margin of 43%-44%, SG&A of $27 million and EPS of $0.23-$0.25. Gross margin ticked down 21bp to 43.3%, reflecting a shift in product mix towards high growth products with lower margins, paired with higher air freight related charges (~$1.1 million) in connection with the west coast port slowdown. SG&A grew 20.5% to $31.1 million (32.1% of sales vs. 35.7% in 4Q13). Operating leverage was created by sales growth, partially offset by opportunistic demand creation spend and higher incentive comp. Inventory exiting the quarter was up 36% y/y to $55 million." Skullcandy Inc. closed on Thursday at $11.07.
Posted In: Analyst ColorPrice TargetAnalyst Ratings
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