Skullcandy (SKUL) Stabilizing But Questions Remain - Piper Jaffray

Piper Jaffray analyst Sean P. Naughton reiterated an Underweight rating on Skullcandy (NASDAQ: SKUL) despite better-than-expected Q1 results. While brand statilzation continues, questions remain around U.S. comp door growth. The firm's price target goes to $7.50 (from $7.00)

Naughton commented, "Skullcandy reported Q1 EPS of ($0.12), exceeding guidance and consensus expectations due to gross margin upside and expenses shifting to Q2, partially offset by an unfavorable tax rate. Based on the Q1 results, the company raised its full year EPS guidance by $0.06. Positive news included strong sell-throughs of the Air Raid Bluetooth speaker, more speakers being introduced for the holiday season and entering the first Walmart stores during Q2. While there are signs of a turnaround at Skullcandy, we remain concerned about the lack of growth at existing accounts in the U.S., specifically for headphones. We are raising our price target slightly to $7.50, but are maintaining our Underweight rating at this time as we want to see growth in existing U.S. doors before becoming more constructive on SKUL shares."

The firm raised FY 2014 EPS from $0.12 to $0.17 and FY 2015 EPS from $0.25 to $0.29.

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

Shares of Skullcandy closed at $7.75 yesterday.

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