Deutsche Bank downgrades Logitech, saying computer and video companies won’t do well in the troubled economy
Logitech shares should fall as tougher economic conditions hurt PC and video spending, Deutsche Bank said on Friday. Analyst George Brown downgraded the stock to hold from buy. Brown also lowered its price target by CHF 14 to CHF 54, down 4.7% from Thursday’s close. The previous price target implied the stock would gain 20%. “We are becoming more cautious on Logitech as the current PC market downturn and weaker demand appears to be more severe than expected,” Brown said in a note to customers. U.S.-listed shares fell 5% in premarket trading on Friday. The stock is down nearly 9% so far in 2023, despite the broader market’s gains earlier in the year. Logitech pre-released its fiscal third-quarter results, which showed it missed revenue expectations by 9%. The company said it expects revenue to decline more than previously expected while also lowering its non-GAAP target for operating income by 15%. And it’s not just expecting challenges in 2023. Brown also lowered its estimate of non-GAAP operating income for the fourth quarter by 15% from its previous guidance for fiscal 2024. This comes amid broader concerns for the personal technology industry, as consumers increasingly consider large purchases amid inflationary pressures. Industry research data IDC’s PC Tracker showed that PC shipments fell by 28% in the fourth quarter of 2022 compared to the same period last year. Of course, Logitech’s sales have a historically low correlation with PC shipments, but Brown cautioned that the correlation will grow stronger as the overall economy worsens. Brown said he is more cautious about the video collaboration market, which he says has so far missed expectations despite its contribution to long-term growth goals. He said the product could fall out of favor if companies cut spending further. Meanwhile, the company noted ongoing challenges in production due to new Covid outbreaks in China. – CNBC’s Michael Bloom contributed to this report.
https://www.cnbc.com/2023/01/13/deutsche-bank-downgrades-logitech-says-computer-and-video-businesses-wont-fare-well-in-tough-economy.html Deutsche Bank downgrades Logitech, saying computer and video companies won’t do well in the troubled economy
