Logitech shares rebound despite negative impact of macro headwinds on 2Q earnings
Published: 15:19 24 Oct 2023 EDT
Logitech International SA (USA) (NASDAQ:LOGI)'s shares have rebounded on its fiscal second quarter financial results despite the mouse maker reporting an 8% decline in revenue year-over-year.
“Logitech’s results continue to be negatively impacted by macroeconomic headwinds at both the consumer and enterprise level,” Wedbush analysts wrote in a note to clients following the company's 2Q earnings.
“That said, with its streamlined cost structure, Logitech has maintained profitability (2Q GAAP earnings per share of $0.86) and strong free cash flow generation (2Q free cash flow per share of $1.29).”
They awarded the stock a ‘Neutral’ rating and noted that their estimates and price target were under review. Their current price target on Logitech is US$80.
Logitech shares traded up 12.9% at US$77.14 on Tuesday afternoon.
“While we maintain that the company is well-positioned to gain further market share amid long-term expansion in PC peripherals and video conferencing stemming from hybrid work, and to benefit from long-term growth in global gaming, we think shares may be range-bound into the holiday quarter as investors gain confidence in the economy and consumer spending, and in Logitech’s ability to rebound once macroeconomic headwinds ease,” the analysts wrote.
They believe management has set up the company for a fiscal 2024 earnings beat, with guidance increased by $150 million on the high end of the guide from a range of -16% to 12% to a range of -12% to -9%.
They also noted that it has increased its non-GAAP (adjusted) operating income guidance by $75 million on the high end to a range of $525 million to $575 million up from its previous guidance range of $400 million to $500 million.
“This sets up another beat on guidance as long they do not have to get significantly more promotional during this holiday season to work through inventory,” the Wedbush wrote.
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