TD downgrades Napco Security on equipment negative surprise

TD Cowen downgraded Napco Security (NSSC) to Hold from Buy with a price target of $27, down from $46. The firm says Napco’s second consecutive negative surprise in equipment revenues suggests weaker visibility than it had anticipated. TD remains constructive on the company’s underlying business opportunity, but pending clarity around equipment revenue as both a profit center and potentially expanding driver of service revenues, the stock’s risk/reward “no longer seems imbalanced,” the analyst tells investors in a research note. The firm says that in “stark contrast” to expectations, Napco reported deteriorating performance in equipment revenues.