Roth Capital Assigns Neutral On Quicksilver, Cuts PT To $2


In a research report issued Monday, Roth Capital analyst Dave King assigned a Neutral rating on Quiksilver (NYSE:ZQK) and lowered his price target to $2 (from $4), following weak third-quarter results.

King noted, “We cut estimates following disappointing 3Q14 results and continued revenue pressures. We expect moderating declines in 4Q14, helped by easier comparisons in the highly-challenged DC business, and see a catalyst in management providing color around additional businesses it could license. Meanwhile, the business is generating cash on a working capital basis. Offsetting this, we have yet to see signs of a turn in fundamentals and would not be surprised to see ZQK soon look to raise equity to improve liquidity.”

King continued, “Results & Guidance Well Below Expectations. Core EPS of ($0.20) was well-below our breakeven estimate and consensus of $0.03, driven by lower revenues and gross margin and higher-than-expected expenses. Revenue from continuing operations fell 19.0% YOY to $395.7M, below our $437.6M projection and consensus of $439.6M, due to lower revenues in North America and Europe, the conversion of certain categories to a licensing model, and shipping delays mainly tied to the company’s transition to global demand planning. Management believes it is resolving product delivery issues and noted improved fulfillment for Holiday. For the quarter, the company posted breakeven EBITDA, below our $35.8M projection.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Dave King has a total average return of 3.3% and a 46.9% success rate. King is ranked #1503 out of 3275 analysts.

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