UPDATE: D.A. Davidson Upgrades Skullcandy

In a report released Wednesday, D.A. Davidson analyst Andrew Burns upgraded Skullcandy (NASDAQ: SKUL) from Hold to Buy while increasing its price target from $8 to $10.

Analysts at D.A. Davidson favor Skullcandy's core business stabilizing, influencing operating margin improvement by 12.2 percent, higher margin in-ear product and expansion into Wal-Mart stores. The note states the company benefiting from Wal Mart's recent announcement of $20 million with accretive margins over the next few years.

D.A. Davidson's $10 price target is based on a 10x EV/EBITDA multiple.