Logitech 2Q profit slump expected on softer IT spending
Published: 16:02 18 Oct 2023 EDT
Logitech International SA (USA) (NASDAQ:LOGI) will release its second quarter fiscal 2024 financial results on Tuesday, October 24 after the market close, and analysts are not expecting to see either top or bottom-line growth from the company.
The maker of technology accessories including keyboards, mice, headphones, and webcams, is expected to report a 21.4% drop in earnings per share (EPS) when compared to the same period in 2022.
Analysts expect EPS of $0.66, down from $0.84, according to Zacks Investment Research.
Revenue is also expected to decline 14.8% from the year-ago period, from 1.15 billion to $978.4 million.
Softer IT spending, which dragged on the firm’s first quarter earnings in July, is expected to continue to contine to impact its earnings for 2Q.
Ongoing high inflation and interest rates are also expected to have dented consumer demand for Logitech’s speakers, tablets, wearables and other products.
Analysts at Wedbush reiterated their ‘Neutral’ rating on the company ahead of its quarterly earnings.
“After significant pandemic-era expansion throughout its categories, macroeconomic headwinds and currency pressure halted Logitech’s growth trajectory,” they wrote in a note to clients.
They believe Logitech shares will remain rangebound until consumers’ holiday shopping intentions become clearer. They have a US$80 price target on the stock.
The company’s United States-listed shares traded lower on Wednesday afternoon, down 1.8% at US$70.86.
“Should shares retract over the near-term, we would consider it a buying opportunity,” the Wedbush analysts wrote.
“That said, we think there is limited upside from our current target before there is further evidence that Logitech can meaningfully exceed its stated 2024 financial year targets.”
After trough operating margins in fiscal 2023, the analysts expect recovery in fiscal 2024, even as revenue is likely to decline further in the first half of the fiscal year.
“The timing of the rebound may be staggered for different categories, with Gaming likely to recover first as top-tier titles are due throughout the balance of this calendar year and inventory is beginning to right-size,” they wrote.
“We expect Video Collaboration to rebound last as IT managers postponed upgrades and outfitting offices for hybrid work until the economy rebounds.”
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on X, formerly known as Twitter, @emilyjjarvie
