Skullcandy's (SKUL) Higher-Than-Expected Gross Margin Offset Low Revenue; Roth Capital Reiterates Buy

Roth Capital maintained a Buy rating on Skullcandy (NASDAQ: SKUL), and cut the price target to $10.00 (from $12.00), following the company's 3Q earnings report. EPS of $0.08 met consensus, as higher-than-expected gross margin offset slightly lower revenue. Revenue grew 16% YOY to $67.2M, slightly below consensus of $68.6M.

Analyst Dave King commented, "Results generally met expectations, but management lowered 4Q15 guidance to reflect international distribution cleanup initiatives, later-than-normal store resets still occurring ahead of Holiday, and higher taxes. Positive trends included strong sell-through gains, thousands of additional in-store pegs domestically, and meaningful traction for new offerings in a rapidly-growing wireless market amidst continued growth in wired earbuds. Meanwhile, gross margin and balance sheet concerns seem overblown. We reiterate our Buy."

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 $6.34 yesterday.

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