Dougherty & Co Assumes Proto Labs (PRLB) at Sell
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Dougherty & Co assumed coverage on Proto Labs (NYSE: PRLB) with a Sell rating and a price target of $50. Analyst Jon Fisher thinks disruption in the company's sales organization could have greater impact than many investors expect.
Fisher explained, "Disruption and turnover within the sales organization, including the departure of the head of sales earlier this year, has had ripple effects within PRLB. The negative impact is likely to last longer and be more significant than Street expectations."
The analyst added, "Our numbers for the rest of this year and for next year are lower than consensus given our concerns and we feel that consensus numbers will continue to come down. Estimate reductions and slowing growth could act as an anchor on the stock and create further downside risk given the current multiple of 31x our CY17 EPS estimate. Our Sell rating and $50 Price Target reflect our near-term concerns about growth and the current valuation. Our Price Target incorporates revenue growth slowing from 25%+ to single digits and EPS growth slowing from mid/high-teens to single digits as the company manages through the impact of the salesforce disruption and a cost structure designed for higher growth rates."
Shares of Proto Labs closed at $59.46 yesterday.
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