LeapFrog Enterprises (LF) shares are up sharply this morning after Needham analyst Sean McGowan upgraded his rating the educational electronic games company’s shares� to Strong Buy from Buy.
“Our retail checks indicate that LF’s products enjoyed very strong sales in Q2, with consumer takeaway up over 25% for key products,” he writes in a research note. McGowan thinks shipments in the second quarter were up more than 20%, and that pre-tax loss will be “sustainably below last year’s level.” He thinks the company will post positive cash flow and profits this year, and will enter 2011 with “good growth prospects.”
McGowan maintains his $8 price target on the stock, which closed Friday at $4.33.
LF this morning is up 37 cents, or 8.6%, to $4.70.
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