We are downgrading our Neutral recommendation on Logitech International (LOGI) to Underperform with a target price of $8.25. In the recently concluded quarter, the company witnessed lower than expected sales, especially in the EMEA region.
The weakness in EMEA was the result of lower-than-expected demand late in the fourth quarter and poor execution of pricing in channel programs in the region. Further, the gross and operating margins also declined due to weaker-than-expected demand and the charge related to re-pricing of Logitech Revue.
In addition, for fiscal 2012, the company expects a decline in sales of its PC peripherals, primarily in the mature markets. Logitech currently has a Zacks #5 Rank (Strong Sell).
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