Skullcandy Is 'Sweet Music' To This Analyst's Ears; Price Target Raised To $17

Jefferies raised its price target on Skullcandy Inc SKUL Thursday from $14 to $17 and maintained a Buy rating following an investor meeting.

Analysts led by Randal J. Konik viewed the company "as the best small cap idea in consumer discretionary today based on better management, enhanced product and improving fundamentals."

Konik outlined five points the analysts learned from the company's management:

1. "Product is key and Skullcandy has it" with innovative wireless and gaming products in the pipeline at disruptive prices.

2. "Distribution is squeaky clean" with a "cleaner distribution position" and growth that will be sustainable.

3. "Fundamental improvements abound" with an opportunity for "sales to double followed by op margin expansion driven by a better managed organization and international expansion."

4. Skullcandy is a "big fish in a small pond" and additional market share gains remained "a compelling driver to this story."

5. FX and the loss of sales through RadioShack Corporation RSHCQ were already reflected in the share price.

Upcoming catalysts included expansion into new international markets, e-commerce progress and acceptance of new products for women, sports performance, and wireless/Bluetooth.

The firm's $17 price target was based on 1.6x FY 2016 EV/sales.

Skullcandy Inc was "sweet music to our ears," Konik concluded. The stock recently traded at $11.49, up 5.61 percent.