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On Friday, BofA Securities adjusted its stance on Logitech (NASDAQ:LOGI) International SA (LOGN:SW) (NASDAQ: LOGI), downgrading the company’s stock rating from Neutral to Underperform. Alongside this downgrade, the firm also reduced the price target for Logitech from CHF 91.00 to CHF 80.00. The stock, currently trading at $101.21, has shown strong momentum with a 23% gain year-to-date, though InvestingPro analysis suggests the stock is fairly valued at current levels.
The revision by BofA Securities comes as the firm revises its revenue and EPS estimates for Logitech for the fiscal years 2026 and 2027. The estimates have been lowered by 2.6% and 6-10% respectively. This adjustment reflects expectations of a decreased gross margin and a less favorable product mix. InvestingPro data shows Logitech maintains a healthy 43.3% gross profit margin and strong financial health, earning a "GREAT" overall score in InvestingPro’s comprehensive analysis.
According to BofA Securities, the new price target implies that Logitech’s stock would trade at 15 times its forecasted FY26 enterprise value to EBITDA. This is a decrease from the previous multiple of 16 times. The firm noted that this valuation is aligned with Logitech’s historical median multiple, which has ranged from 10 times to 21 times, excluding the COVID period. Currently, Logitech trades at an EV/EBITDA multiple of 16.7x, with a P/E ratio of 22.8x.
The analysts at BofA Securities have expressed concerns over the stock’s potential to achieve a higher valuation if the company’s growth falls short of expectations. Despite a more optimistic view on the Video Collaboration segment, the firm holds a more pessimistic growth outlook for the Pointing Devices and Gaming divisions.
The price target and rating downgrade reflect BofA Securities’ caution regarding Logitech’s future performance in the market. The firm anticipates that the stock could face challenges in achieving a higher valuation amidst the projected lower growth rates.
In other recent news, Logitech International SA reported robust financial results for the fourth quarter of 2024. The company achieved an earnings per share (EPS) of $1.59, surpassing the forecasted $1.37. Revenue also exceeded expectations, reaching $1.34 billion compared to the projected $1.25 billion. This strong performance underscores Logitech’s effective operational strategies and market positioning. Additionally, Logitech successfully completed a merger with KMC, which has significantly enhanced its portfolio value and increased market capitalization by 189%. Analysts from DNB Markets noted the positive impact of these developments on Logitech’s financial health. The company’s focus on high-occupancy rates and long-term leases in the Nordic region has further strengthened its competitive position. Logitech is also exploring future growth opportunities through potential mergers and acquisitions and capital investments.
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