Wedbush analyst Alicia Reese has adjusted the price target for Logitech (LOGI, Financial), bringing it down from $125 to $110. Despite this reduction, the firm maintains an Outperform rating on the stock. The price cut is primarily due to concerns about new tariffs that could affect Logitech's operations.
Wedbush acknowledges Logitech's past agility in handling tariff-related challenges. The company has shown the ability to pass on increased costs to consumers without significant resistance. However, the uncertainty surrounding the scale and impact of these tariffs has compelled the company to retract its fiscal year 2026 guidance.
The firm suggests that a cautious approach to valuation is necessary given the current unpredictability of gross margins. Nonetheless, Wedbush remains confident in Logitech's potential, as reflected in its continued positive rating.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for Logitech International SA (LOGI, Financial) is $87.27 with a high estimate of $113.00 and a low estimate of $70.00. The average target implies an upside of 16.43% from the current price of $74.95. More detailed estimate data can be found on the Logitech International SA (LOGI) Forecast page.
Based on the consensus recommendation from 8 brokerage firms, Logitech International SA's (LOGI, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Logitech International SA (LOGI, Financial) in one year is $71.96, suggesting a downside of 3.99% from the current price of $74.95. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Logitech International SA (LOGI) Summary page.
LOGI Key Business Developments
Release Date: January 28, 2025
- Net Sales: Increased by 6% year over year.
- Gaming Net Sales: Grew double digits, nearing pandemic levels.
- Pro Line Net Sales: Hit record levels.
- MX Line Net Sales: Near record levels.
- Regional Growth: Asia grew high-single digits; Europe and the Americas grew mid-single digits.
- Non-GAAP Gross Margin: 43.2%, up 90 basis points year over year.
- Operating Expenses: Impacted by a $40 million bad debt reserve charge.
- Non-GAAP Operating Income: Increased by 7% compared to the prior year.
- Cash from Operations: Generated $370 million in the quarter.
- Cash Position: $1.5 billion.
- Shareholder Returns: $200 million returned through share repurchases; over $650 million returned since fiscal year '25 began.
- Credit Facility: Announced a five-year $750 million credit facility.
- Fiscal Year 2025 Outlook: Increased for both net sales and operating income.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Logitech International SA (LOGI, Financial) reported a 6% year-over-year increase in net sales, driven by strong demand in both business and consumer channels.
- The company's AI-driven products, such as the Logitech Sight and Rally Board 65, have been well-received, with the former being recognized as one of TIME's best inventions of 2024.
- Logitech's B2B channel showed significant growth, with services bookings more than doubling and a 20% growth in the education vertical.
- The company achieved a non-GAAP gross margin rate of 43.2%, marking the fifth consecutive quarter of year-over-year gross margin rate expansion.
- Logitech's cash generation remains robust, with $370 million generated from operations in the quarter, contributing to a healthy cash position of $1.5 billion.
Negative Points
- Logitech faced a $40 million charge for bad debt reserve due to an issue with an e-commerce payment provider.
- The company anticipates a $40 million headwind in the fourth quarter due to bad debt and foreign exchange impacts.
- Logitech's Q4 outlook suggests a potential decline in non-GAAP EBIT by approximately 20% year over year.
- The strengthening of the US dollar is expected to negatively impact the company's results in the fourth quarter.
- Despite strong demand, the company expects gross margin rates to decrease to around 41.5% in the fourth quarter due to FX impacts and the absence of inventory reserve releases.
