Don't Sell Lifelock Stock On FTC Investigation, Deutsche Bank Reiterates

In a report published Wednesday, Deutsche Bank analyst Nandan Amladi maintained a Buy rating on Lifelock Inc LOCK, while reducing the price target from $26 to $20, on account of legal uncertainty related to FTC charges against the company.

Amladi pointed out that the near 50 percent loss in the value of Lifelock, after the FTC announced that the company had "failed to live up to its obligations under the 2010 settlement" and sought full redressal for all affected consumers, was an "overreaction and unjustified."

Disagreeing with the FTC announcement, Lifelock mentioned that it will take its case to the court.

Related Link: Analysts React To Lifelock's 50% Decline

In the report Deutsche Bank noted that "a protracted legal process could keep the stock under pressure, even as core operations remain unaffected and healthy results in recent quarters show the company continuing to benefit from data breaches."

"LOCK's discussed range of a potential settlement costing between $20m and $100m (on the February 10, 2015 earnings call) appears to have grossly underestimated what the FTC wanted, judging from the company's intent to pursue a lawsuit," the report pointed out.

A long legal process could distract the management, while potential regulatory changes could restrict the customer acquisition momentum.

Lifelock's ID Analytics business continues to set the company apart from the competition, with "no competitively similar real-time alerting platform."