Analysts Anticipate Continued Good Times for Logitech

You stick around long enough, things change. It was back in April that shares of Fremont, Calif.-based Logitech (LOGI) were swooning on fears that Microsoft (MSFT) was taking away its business. Logitech had been a dog in a strong tech market through Wednesday’s close of $29.49, rising a measly 3% for the year-to-date.

Well, Thursday, shares of Logitech, which sells a couple billion dollars in computer mice and keyboards each year, are soaring following its late night announcement of sales of $595 million, above analysts’ estimates for $556 million.

Nor do investors seem to care that the company has canned its treasurer for taking out bad loans, as Eric noted Thursday morning.

Things change!

The company didn’t provide a figure for diluted income per share because it’s still calculating the impact of the company’s collateralized debt obligations. The company did say that operating income rose 54%, year over year, to $80.4 million, and that gross profit was 36.3% of sales, an all-time high for the company. The company announced that chief executive Guerrino De Luca is passing the baton to the company’s veep for global sales and marketing, Jerry Quindlen.

• Kaufman Brothers analyst Manuel Recarey, commenting on the “excellent” outperformance in sales, estimates that the final profit per share number will be 40 cents, way above his estimate of 28 cents. Analysts have been modelling 27 cents, on average, according to Thomson Financial. Recarey’s new price target is $40, up from $32, based on revised sales and profit estimates. He now expects $2.404 billion in sales in the fiscal year ending March, and $1.49 in profit, up from an estimate of $2.347 billion and $1.41. He says Logitech should benefit as “the secular trends of video over the Internet, digital entertainment and the adoption of wireless accessories for desktops and laptops should remain strong.”
• Pacific Crest analyst Andy Hargreaves says the company’s strong sales demonstrate Logitech’s “excellence in design, commitment to product quality, and hold on retail shelf space,” in consumer peripheral sales. He sees continued good times as “Logitech has momentum in the key areas of notebook accessories, keyboards, audio, console accessories and remotes.” Hargreaves continues, “Management suggested that fiscal Q3 (Dec.) started off very strongly, and we expect that momentum to continue.” He rates the stock a Sector Perform and says that the stock is “trading at the high end of its historical trading range, which will likely limit stock appreciation to earnings growth.”

Both Recarey and Hargreaves say the accounting issue around investments that’s delayed reported EPS figures is a non-issue that won’t affect the company.

With expectations of a strong PC market in the fourth quarter, it seems hard to believe the good times won’t, indeed, keep rolling right along for Logitech.

LOGI 1-yr chart: