Roth Capital Reduces Black Diamond Price Target To $10 Following 2Q14 Earnings Results


In a report issued yesterday, Roth Capital analyst Dave King affirmed coverage on Black Diamond (BDE) with a Buy rating and reduced his price target to $10 (from $11). The report follows second quarter earnings, where sales were $4.8b and was in line with consensus.

King noted, “We are lowering estimates following the release of pro forma 2013 and 1Q14 results, which exclude BDE’s recently-divested Gregory Mountain Products business. Gregory contributed ~17% of BDE’s revenues (+14% YOY) and generated a 27.4% operating margin. Management sold it to focus on potentially faster-growing segments and paydown $26.7M in debt. We continue to like BDE for its strong brand portfolio and experienced leadership, but worry about overly optimistic investor expectations”.

Furthermore the analysts said, “We expect the $69.2 million in net proceeds (after fees, expenses, and taxes) to be used to pay off the company’s $26.7 million line of credit and term loan with Zions First National Bank, leaving approximately $18.7 million in outstanding debt and boosting the company’s cash balance to $59.3 million. We expect the remaining proceeds to be used for building faster-growing businesses like POC and Black Diamond apparel”.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Dave King has a 4.2% average return and a 33% success rate. King is ranked #1500 out of 3189 analysts.

 

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