Piper Jaffray Downgrades ReachLocal (RLOC) to Neutral

Piper Jaffray downgraded ReachLocal (NASDAQ: RLOC) from Overweight to Neutral with a price target of $5.00 (from $12.00) following Q2 results and withdrawn guidance.

Gene Munster commented, "ReachLocal reported Jun-14 1% above the Street and guided Sept-14 revenue 7% below the Street. The company also withdrew full-year guidance. The substance of the earnings call included the company outlining steps to return ReachLocal to revenue growth. Our revised model expects revenue growth to return in the third quarter of 2015. Given we are four quarters away from revenue growth we are taking a conservative approach to our rating and downgrading shares to Neutral from Overweight. We believe that as we get within a quarter or two of the return to growth shares of RLOC will begin to appreciate in anticipation of revenue growth. At that time, we will revisit our rating."

The firm cut FY 2014 EPS from ($1.03) to ($1.36) and FY 2015 EPS from $0.02 to ($0.50).

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

Shares of ReachLocal closed at $6.40 yesterday.

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