Analyst Believes Logitech Has Potential Despite Weak H1 2024 Guidance: Issues Upgrade, New Price Target

Morgan Stanley analyst Erik W. Woodring upgraded Logitech International SA LOGI to Equal-Weight from Underweight with an increased price target of $56 from $40.

• The rating upgrade, which came before Logitech's earnings release tomorrow, reflected the analyst's belief that Logitech was well positioned to benefit post-recovery in its end markets, given its strong leadership position.


• The analyst thought channel inventories at March-end were getting back in line with the pre-COVID-19 level (according to their proprietary U.S. channel inventory tracker). 


• Woodring noted the company's weak guidance for H1 2024, announced on Investor Day in March, had already been factored into the consensus estimates.


• For H1 2024, Logitech expected revenue to be within $1.8 billion and $1.9 billion (-22% to -18% in U.S. dollars), adjusted operating income of $160 million and $190 million. Also, the company confirmed its 2023 outlook for sales decline of 15% to 13% in constant currencies and adjusted operating income of $550 million and $600 million.


• The analyst expected Logitech revenues to bottom in the March quarter and near-term revenue to be higher in the June quarter. 


• Woodring still saw renewed pressure on consumer/enterprise hardware spending amid a challenging economic environment as a matter of concern. 


• LOGI Price Action: LOGI International shares are trading higher by 3.40% at $61.48 Monday at publication.

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