Deutsche Bank Maintains Buy On LifeLock Following Massive 50% Sell-Off On Tuesday

In a report published Wednesday, Deutsche Bank analyst Nandan Amladi maintained a Buy rating on

, while reducing the price target from $26 to $20, saying that the FTC investigation "could take longer to resolve." The FTC has issued a press release saying that LifeLock had "failed to live up to its obligations under the 2010 settlement," while asking the court to "impose an order requiring LifeLock to provide full redress to all consumers affected by the company's order violations." The company responded with a press release stating that they disagreed with the "substance of the FTC's contentions" and were prepared to "take our case to court." Analyst Nandan Amladi pointed out that legal procedures were "hard to gauge" in terms of both duration and cost. The company had estimated a potential settlement costing ranging from $20m to $100m, which "appears to have grossly underestimated what the FTC wanted, judging from the company's intent to pursue a lawsuit," Amladi added. LifeLock has more than $3 per share, or $293m, of cash and equivalents on its balance sheet. In view of this, there could be "minimal catastrophic risk to the business," Amladi said, while adding that the details were not available of "what the FTC's demand for "redress" entails." In the report Deutsche Bank noted, "While today's developments are disappointing after the company took a legal reserve of $20m earlier this year, we think the stock losing half its value is an overreaction and unjustified." The price target reduction reflected that a long-drawn-out legal process could continue to exert pressure on the company's stock, "even as core operations remain unaffected and healthy results in recent quarters show the company continuing to benefit from data breaches," the report added.