Too Early to Get Bullish on LeapFrog (LF), Needham & Company Says

Shares of LeapFrog (NYSE: LF) are under heavy pressure following disappointing Q1 EPS and sales. Specifically, sales in the June quarter fell 43% versus a 24% drop drop in the December quarter, followed by a 31% drop in the March quarter.

Needham & Company analyst Sean McGowan noted that while the quarter was worse than expected, it was not surprising given continued high level of retail inventories of old product and the later-than-normal shipment of new products. McGowan expects the weakness to continue in the September quarter (F2Q), but believe that new product launches should boost sales in F3Q and F4Q.

"While we expect YoY comparisons to improve significantly in the second half of the fiscal year and into F2016, we still believe it is a bit early to get bullish on the shares, as our forecast for F2016 does not yet support a much higher price," the analyst said.

The firm now expect F2015 sales to be about $495 million, down from their prior estimate of $541 million, and they expect EPS to be a loss of $0.02, versus their prior estimate of a profit of $0.17. For F2016, they expect sales of $549 million and EPS of $0.15, versus their prior estimates of $586.1 million for sales and EPS of $0.27.

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 $7.39 yesterday.

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