Piper Jaffray Cuts Price Target on LeapFrog Enterprises (LF) After Meeting with Management

Piper Jaffray reiterated a Neutral rating on LeapFrog (NYSE: LF), and cut the price target to $0.75 (from $1.50), after meeting with management. The competitive environment has stiffened and LF has lost its lead, new innovation is quickly matched by fast followers, the core tablet business is in a persistent state of decline, and the evolution of the content model is slow and underdeveloped.

Analyst Stephanie Wissink commented, "We are maintaining our Neutral rating but see increased risk to the share price, based on the anticipated rate of cash burn, and ultimately the timeline and capital required to redirect the business. We have less confidence in the company's ability to architect a turnaround - the competitive environment has stiffened and LF has lost its lead, new innovation is quickly matched by fast followers, the core tablet business is in a persistent state of decline, and the evolution of the content model is slow and underdeveloped. While we are intrigued by a stronger bias toward toys and fresh new marketing, we fear the fundamentals have weakened too far and recovering to prior run rate revenue and profit levels is unlikely. A take-out hedges some downside risk, but not all. We are lowering our estimates and PT."

For an analyst ratings summary and ratings history on LeapFrog click here. For more ratings news on LeapFrog click here.

Shares of LeapFrog closed at $0.73 yesterday.

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