Can It Get Worse For LeapFrog? – Benzinga

Can It Get Worse For LeapFrog? – Benzinga

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In a report published Monday, BMO Capital Markets analyst Gerrick L. Johnson maintained an Outperform rating on LeapFrog Enterprises, Inc. (NYSE: LF), while reducing the price target from $8 to $4, saying that the company is “leaping backwards.”

LeapFrog accounted its F4Q EPS at a loss of ($1.08), up significantly from the loss of ($0.17) reported in 4Q14 and much worse than the expectations of a loss of ($0.19) per share.

Analyst Gerrick L. Johnson said, “We have grown accustomed to quarterly earnings misses from LeapFrog, but each time thinking things have gotten so bad they could not possibly get any worse. Thus, neither we nor the market was prepared for the company’s FY2016 guidance that financials would actually be worse than in FY2015, a year when sales declined 36% (on top of an 11% decline in FY2014) and earnings plummeted to a loss of ($1.08) per share.”

Johnson still sees value in the LeapFrog brand, which occupies a “desirable niche in the education segment.” With LeapFrog’s stock trading below cash and book value, the company is “an attractive takeover target.”

“In the meantime, as a standalone company the outlook continues to deteriorate,” Johnson added. The EPS estimates for FY16 and FY17 have been reduced from ($0.10) to ($0.75) and from a profit of $0.05 to a loss of ($0.35) per share, respectively.

Latest Ratings for LF

Date
Firm
Action
From
To
Jun 2015
BMO Capital
Maintains

Outperform
Jun 2015
Piper Jaffray
Maintains

Neutral
Jan 2015
Monness Crespi Hardt
Downgrades
Buy
Neutral

View More Analyst Ratings for LF
View the Latest Analyst Ratings

Posted-In: BMO Capital MarketsAnalyst Color Price Target Reiteration Analyst Ratings

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Can It Get Worse For LeapFrog? – Benzinga

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