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Bear of the Day

We maintain our Underperform recommendation on Logitech International (LOGI) with a target price of $7.00. In the recently concluded quarter, the company witnessed lower-than-expected sales, especially in the EMEA region. This was due to product gaps in the video and digital home categories.

Two of the company's primary business divisions also reported revenue declines. Furthermore, the operating income declined due to weaker-than- expected demand and high research and development expenses during the quarter. In addition, for fiscal 2012, the company expects a decline in sales of its PC peripherals, primarily in the mature markets.

Our long-term Underperform recommendation on the stock indicates that it will perform below the market over the next six to twelve months. Our target price is $7.0 or 22.6x 2012 EPS, which is well within the historical range.

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