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Investing.com -- Symbotic (NASDAQ:SYM) stock fell 4.9% Tuesday, trading at $81.15 pre-market after Goldman Sachs downgraded the warehouse automation company to Sell with a price target of $47.
Goldman Sachs analyst Mark Delaney cut his rating on Symbotic from Neutral to Sell, citing concerns about the company’s customer base and cash flow prospects. The analyst’s price target suggests a potential 44.9% downside from Monday’s closing price of $85.30.
Delaney highlighted that while Symbotic’s technology has been well-received by Walmart, which has ordered systems for all 42 of its U.S. regional distribution centers, new independent customer bookings have been limited in recent years.
A key concern in the downgrade is Symbotic’s relationship with GreenBox, a joint venture formed with SPAC-sponsor SoftBank. Over half of Symbotic’s $22.5 billion backlog—approximately $11.6 billion—consists of sales to this JV, which is 35% owned by Symbotic and 65% by SoftBank.
According to Goldman Sachs, system shipments to GreenBox are likely to generate limited initial cash flow since Symbotic can fund its 35% share of the JV with either cash or forgone profit on system shipments. This structure could result in cash flow growth lagging behind adjusted EBITDA growth.
The analyst also expressed concern that GreenBox has yet to sign any unrelated customers more than two years after its formation, describing the arrangement as "the type of circular transaction that investors are increasingly scrutinizing."