NEW YORK (TheStreet) -- Skullcandy (SKUL) was rising 7.26% to $9.90 at 1:15 p.m. on Monday after D.A. Davidson upgraded the company, which makes headphones and other audio devices, to "neutral" from "underperform" and set a target price of $10.
The firm noted that the company's 2014 outlook suggests a quicker turnaround than previous estimates. Skullcandy reported 5% to 7% revenue growth, or approximately $39 million to $40 million, and GAAP earnings per share of 16 cents to 18 cents. The company issued full-year guidance of mid- to high-single digit revenue growth and GAAP EPS of 10 cents to 14 cents. Consensus estimates called for was looking for 4% revenue growth and EPS of 9 cents.
"The return to growth in 1Q guidance and full year profitability suggests our timeline for recovery was overly conservative," D.A. Davidson wrote in a research note. "With clean inventories, accelerating new product introductions, new distribution opportunities, and international growth potential, it is clear that the painful market reset experienced in 2013 has better positioned SKUL for 2014. The brand appears set to solidify its place as a top 4 brand alongside Beats, Bose and Sony. In our view, the long-term margin recovery potential on this revenue growth remains difficult to gauge."
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TheStreet Ratings team rates SKULLCANDY INC as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation: