Logitech stock rating upgraded at Deutsche Bank, target to CHF80

On Friday, Deutsche Bank (ETR:DBKGn) analyst George Brown upgraded Logitech (NASDAQ:LOGI) International SA (LOGN:SW) (NASDAQ: LOGI) stock rating from Sell to Hold and increased the price target to CHF 80.00 from CHF 60.00. Brown’s assessment followed Logitech’s positive performance in the third quarter, particularly noting stronger-than-expected growth in China and the gaming sector. The stock has shown remarkable momentum, with a 20.5% return year-to-date and trading near its 52-week high of $102.59. According to InvestingPro analysis, the company currently appears overvalued relative to its Fair Value.

Brown highlighted that Logitech had previously adjusted its long-term sales growth target from 8-10% to a more achievable figure closer to 5%, a move that had been anticipated by analysts last year. The recent Q3 report, which outperformed expectations, is now leading to a shift in focus towards the company’s Capital Markets Day in Silicon Valley on March 5, 2025. InvestingPro data reveals strong fundamentals, with a healthy gross profit margin of 43.3% and robust return on equity of 31%. At this event, Brown expects Logitech to present upgraded long-term profitability targets.

According to the analyst, Logitech is likely to benefit from lower product costs, which could provide a sustainable improvement of more than 100 basis points to both gross and operating margins. Non-GAAP margins are projected to potentially increase to 40-45% from 39-44% for gross margins and to 15-18% from 14-17% for operating margins.

Brown also noted that concerns over heavy mergers and acquisitions have been alleviated, with Logitech indicating a preference for smaller, bolt-on acquisitions. This strategic approach may lead the company to enhance shareholder value through increased dividends or stock buybacks, as suggested by the analyst’s commentary.

Investors and market watchers are now looking forward to the upcoming Capital Markets Day, where Logitech is expected to provide further details on its financial strategies and targets.

In other recent news, Logitech International reported robust third-quarter results, surpassing analyst estimates and subsequently raising its full-year guidance. The company’s adjusted earnings per share stood at $1.59, outperforming the projected $1.37, while revenue grew by 7% YoY, reaching $1.34 billion and exceeding the consensus forecast of $1.25 billion. In response to these developments, Kepler Cheuvreux analyst Torsten Sauter upgraded Logitech’s stock rating from Hold to Buy, raising the price target to CHF 100.00 from CHF 77.00.

Sauter’s upgrade followed Logitech’s strong performance, particularly in the Gaming and Video Collaboration sectors, which have shown signs of revival. The company’s ability to navigate post-pandemic market dynamics, including the replacement cycle for tech products, was also noted. Moreover, Logitech’s resolution of its challenges in China and its strategic integration of artificial intelligence were highlighted as significant factors for the company’s growth potential.

Looking forward, Logitech has raised its fiscal 2025 outlook, now expecting revenue of $4.54-4.57 billion, up from its previous forecast of $4.39-4.47 billion and above analyst projections of $4.465 billion. The company also increased its non-GAAP operating income guidance to $755-770 million, reflecting the company’s confidence in its business trajectory.

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