On Sep 27, we upgraded our recommendation on computer
Logitech International SA
) to Outperform based on its improved prospects. Logitech, which
focuses on the lucrative gaming and tablet accessories market,
also carries a Zacks #1 Rank (Strong Buy). The bullish sentiment
came also on the back of the company's launch of innovative
products in the tablet accessories market, which expanded its
product range beyond the traditional PC market.
Why the Upgrade?
Logitech's first quarter fiscal 2014 earnings came in at 2
cents, which outpaced the Zacks Consensus Estimate of a loss of
11 cents and a prior-year quarter loss of 32 cents per share. The
company posted net income of $1.0 million in the reported quarter
compared with net loss of $51.4 million in the year-earlier
quarter. Revenues increased 22% from the year-ago period to
$477.9 million, easily surpassing the Zacks Consensus Estimate of
$428 million by 11.7%. Over the past four quarters, Logitech has
delivered an average surprise of 28.2%.
Following the release of first quarter results, the Zacks
Consensus Estimate for 2014 has surged 18.2% to 26 cents per
share. Moreover, the Zacks Consensus Estimate for 2015 also
increased 22.9% to 43 cents per share.
Apart from strong first quarter results, Logitech's growth
story looks compelling. Logitech, which was primarily operating
in the outdated PC markets and incurring severe losses until a
few months back, has now successfully transformed to capture the
potential offered by the latest devices such as smartphones and
tablets - which are stimulating the demand for peripherals and
accessories. Logitech has tapped the opportunities in both the
mature and emerging markets; The company launched a number of new
and innovative products. Logitech's new
) keyboard has been gaining strong momentum. In addition, its
universal remote app for iPhone and Android is also helping
In addition, Logitech continues to tap the high potential
market for accessories through expanding its product lines.
Recently, Logitech introduced its first protective folios for
tablets to expand its tablet accessories lineup. The new
collection includes an Ultrathin Keyboard Folio for Samsung
Galaxy Tab 3, along with Folio Protective cases for three
different versions of Samsung Galaxy Tab.
In the latest reported quarter, Tablet Accessories was the
best performer among its retail product category, with sales
increasing a robust 143% year over year.
Further, the company's restructuring and turnaround plans
along with strategic divestitures to become a more focused
company also ensure long-term growth.
Other Stocks to Consider
Apart from Logitech, other stocks in the peripheral sector
that are currently performing well include
Alps Electric Co. Ltd
Planar Systems Inc.
). Both carry a Zacks #2 Rank (Buy).
APPLE INC (AAPL): Free Stock Analysis Report
ALPS ELECTRIC (APELY): Get Free Report
LOGITECH INTL (LOGI): Free Stock Analysis
PLANAR SYSTEMS (PLNR): Free Stock Analysis
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