What LifeLock And 'Bigfoot' Have To Do With Each Other
In a report published Thursday, Wunderlich analyst Rob Breza mentioned that LifeLock Inc (NYSE: LOCK) had reported robust 2Q15 results, but its pending issues with the Federal Trade Commission remained an area of concern. Breza added that the impending "Bigfoot" in the forest could last up to a year.
LifeLock is in the early stages of litigation with the FTC and has argued that the latter's claims relate to past business practices. "LOCK reiterated that there has been no data breach and there is no precedent for awarding damages for this type of case without a breach," analyst Rob Breza said.
Noting that LifeLock's 3Q and 2015 guidance takes into account the expected headwinds and attrition from the FTC lawsuit, Breza said that the ongoing management distraction and the pending litigation were likely to keep LifeLock's stock range-bound for a couple of quarters.
In the report Wunderlich noted, "LOCK's identity theft protection value proposition remains strong in the wake of unprecedented breaches and will likely take a brief hit; however, its strong brand and positive fundamentals should guide it out of the forest."
The company reported better-than-expected 2Q revenue of $145 million and EPS of $0.10, with the revenue beat driven by 27 percent YoY growth in the Consumer segment. The company's Enterprise segment grew merely 4 percent YoY.
Meanwhile, BofA Merrill Lynch analyst Scott S. Shiao downgraded the rating on LifeLock from Buy to Neutral, while reducing the price objective from $12 to $10.
Analyst Scott Shiao pointed out that the FTC lawsuit was a predominate overhang on LifeLock's shares. "Our biggest concern is not the FTC lawsuit itself, but rather its possible effect on the core business. The second half of the year will be challenging for the company," the analyst explained.
While LifeLock's stock remained inexpensive, it was unlikely to appreciate until the lawsuit and the fundamental headwinds facing the company reached a resolution, Shiao said.
Latest Ratings for LOCK
|Aug 2016||Goldman Sachs||Initiates Coverage on||Neutral|
|Feb 2016||Deutsche Bank||Maintains||Buy|
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