SKUL blewout revenues during Q1 without commensurate increase in projected 2012 revenues, while keeping projected 2012 EPS at the same levels. Therefore, the company needs to increase its profit margins compared to prior guidance, despite a product line refresh that is likely to increase risk of inventory obsolescence. How is that possible? Analysts are probably going to reduce Q2 EPS, and maybe 2012 EPS.
If you are buying, you probably should wait to see if such downgrades occur.
First comment is from Jeffries. They reiterate "buy" and price target 22. They understand how positive the 1 Q was. It used to be that when you beat revenue estimates like SKUL did, it was the main focus for the stock. Now all market players seem to focus on is temporary gross margins. And in SKUL's case this is only temporary. And there was no support for the short case that SKUL headphones are nothing but a "fad."