Analyst Calls LeapFrog (LF) Q4 'Stellar'
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Rating Summary:
2 Buy, 8 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 4 | Down: 5 | New: 18
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Yesterday LeapFrog Enterprises Inc. (NYSE: LF) reported adjusted EPS of $0.60, easily topping estimates of $0.48 on revenue of $245 million. In the view of SunTrust Robinson Humphrey analyst Michael Swartz, the "stellar" results should come as no surprise.
"The fact LF had a strong holiday season, in of itself, is unlikely to come as a large surprise. LeapPad 2 was out-of-stock at many retailers and LF had three of the four best-selling toys in 2012. In fact, the company had to pull forward some shipments into 4Q to satisfy demand," said Swartz.
LeapFrog's content business also appears on track.
"Not only were LF cartridges the #1 toy in the US in 2012, but digital downloads grew 4x vs. 2011. Recall, this is the highest margin piece of the business and should become an increasing contributor to EPS growth over the next few years," said the analyst.
LF 2013 guidance calls for net sales to increase at a "high single-digit percentage growth rate." Based on Swartz calculations, this works out to $0.90-$0.95 in EPS.
"Importantly, this includes accelerated investments in 2013 that are unlikely to pay off until 2014. While this will mask profitability near term, we doubt the company would embark on these initiatives if it weren’t comfortable with the business 12-18 months out," concluded the analyst.
SunTrust Robinson Humphrey has a Buy rating on LeapFrog with a price target of $14.00.
For an analyst ratings summary and ratings history on LeapFrog (NYSE: LF) click here. For more ratings news on LeapFrog click here.
Shares of LeapFrog closed at $8.99 yesterday.
"The fact LF had a strong holiday season, in of itself, is unlikely to come as a large surprise. LeapPad 2 was out-of-stock at many retailers and LF had three of the four best-selling toys in 2012. In fact, the company had to pull forward some shipments into 4Q to satisfy demand," said Swartz.
LeapFrog's content business also appears on track.
"Not only were LF cartridges the #1 toy in the US in 2012, but digital downloads grew 4x vs. 2011. Recall, this is the highest margin piece of the business and should become an increasing contributor to EPS growth over the next few years," said the analyst.
LF 2013 guidance calls for net sales to increase at a "high single-digit percentage growth rate." Based on Swartz calculations, this works out to $0.90-$0.95 in EPS.
"Importantly, this includes accelerated investments in 2013 that are unlikely to pay off until 2014. While this will mask profitability near term, we doubt the company would embark on these initiatives if it weren’t comfortable with the business 12-18 months out," concluded the analyst.
SunTrust Robinson Humphrey has a Buy rating on LeapFrog with a price target of $14.00.
For an analyst ratings summary and ratings history on LeapFrog (NYSE: LF) click here. For more ratings news on LeapFrog click here.
Shares of LeapFrog closed at $8.99 yesterday.
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