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Investing.com - Morgan Stanley upgraded Sonos Inc. (NASDAQ:SONO) from Underweight to Equalweight on Thursday, raising its price target to $17.00 from $11.00. The new target sits just above Sonos’ current trading price of $16.64, with the stock having surged 81% over the past six months.
The upgrade comes after Morgan Stanley’s previous thesis that reciprocal tariffs would cause a second decline in Sonos stock failed to materialize. The firm noted that Sonos has successfully offset "tens of millions in tariff costs with pricing actions and supply chain pressure." According to InvestingPro data, Sonos is currently trading slightly below its Fair Value, suggesting the market may not be fully recognizing the company’s resilience in managing these challenges.
Morgan Stanley had initially downgraded Sonos to Underweight in August 2024 following a software release mishap in May 2024, which the firm believed would cause extended sell-through declines. This prediction proved accurate through April 2025 when the stock fell to a low of $8, approaching its 52-week low of $7.62.
The firm expressed support for new CEO Tom Conrad’s vision for Sonos to expand beyond an audio system by "doubling down on software/hardware integration with a mix of AI," though it emphasized that "further improvements to SONO software layer are still critical." Investors watching this strategic shift should note that Sonos is scheduled to report its next earnings on November 5, which could provide further insights into the new CEO’s execution plans.
Despite the upgrade, Morgan Stanley noted that Sonos’ valuation at approximately 11x EV/EBITDA "doesn’t make SONO overly cheap," which factored into its decision to upgrade only to Equalweight rather than Overweight. While Morgan Stanley’s EV/EBITDA estimate differs from InvestingPro’s current calculation, the company’s overall Financial Health Score is rated as "FAIR," with particularly strong performance in cash flow metrics. For deeper analysis, InvestingPro offers a comprehensive Pro Research Report on Sonos, one of 1,400+ US equities covered with detailed financial insights.
In other recent news, Sonos Inc . reported its fourth-quarter earnings for 2025, delivering results that exceeded market expectations. The company posted an earnings per share of -$0.06, which was significantly better than the forecasted -$0.47. Revenue for the quarter reached $288 million, surpassing the anticipated $263.98 million. These results mark a notable performance for Sonos, as the company managed to outperform analyst projections. The announcement of these earnings figures was followed by a rise in Sonos stock in premarket trading. This positive outcome reflects the company’s ability to deliver stronger-than-expected financial results. Investors may find these developments noteworthy as they consider the company’s recent performance.
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