Can ZAGG Hop Back on Apple's Coattails?

Shares of ZAGG (NASDAQ: ZAGG  ) tumbled 14% last week, hitting a three-year low after the company hosed down its outlook. The stock actually tumbled 22% between Wednesday and Thursday after the unflattering announcement, rebounding on Friday with a 9% pop.

ZAGG has had a rough year. The stock has shed 46% of its value in 2013, and last week's disappointing report wasn't the first time that the maker of consumer electronics accessories let investors down. 

ZAGG used to be a thinking investor's play on Apple's (NASDAQ: AAPL  ) success. As Apple introduced the iPod, iPhone, and iPad, the consumer tech giant's inability to put out a variety of screen protectors, cases, and wireless keyboards opened an opportunity for third-party providers. ZAGG embraced the opportunity with gusto, and its popular invisibleSHIELD protective film has gone on to sell more than 65 million units. Even Apple wireless carriers began stocking ZAGG products. 

Unfortunately for ZAGG, Apple's gotten craftier with its add-ons. The marketplace for third-party providers has also gotten more competitive. Net sales slid 17% in its latest quarter, while profitability and adjusted EBITDA also went the wrong way. 

The worst part of ZAGG's quarterly report was its guidance. It now sees $212 million to $218 million in revenue for all of 2013; it was previously targeting at least $245 million.

ZAGG stunned investors in May when it reported a 7% decline in net sales. Analysts were banking on a 20% uptick. Earning half as much as Wall Street was expecting was bad, but it was just the beginning. 

"This was a uniquely challenging quarter," its CEO explained at the time, but it wasn't unique at all. ZAGG went on to hose down its outlook again during the summer before last week's latest downward revision.

ZAGG is still profitable, but there's little reason to get excited as long as sales continue to go the wrong way. Apple seems to have given ZAGG a bone. The new form factor of last year's iPhone 5 and the introduction of the iPad mini should've been dinner bells for ZAGG. As Apple tweaks the size of its products -- and reports over the weekend point to next year's iPhone hitting the market with a larger curved screen -- buyers need to snap up new protective screens, covers, and other accessories.

Falling off the wagon is never a good thing, and ZAGG has clearly fallen off the Apple bandwagon. There may come a point where the stock drops low enough to be a compelling value, but the market won't get excited about ZAGG until it begins growing net sales again.

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