On Monday, Wolfe Research raised its rating on Zebra Technologies (NASDAQ:ZBRA) from Peerperform to Outperform, setting a price target of $337.00. The firm anticipates potential upside to Zebra's 2024 revenue guidance, which forecasts a range from a 1% decline to a 3% increase, with Wolfe Research expecting a 3.5% growth.
The company's revenue outlook for the year suggests only modest sequential revenue growth; however, Zebra has indicated a cautiously optimistic view that demand will pick up in the second half of the year.
Insights from the MODEX supply chain expo held in mid-March support expectations of sequential improvement throughout the year, especially in the handheld business segment. Exhibitors at the expo expressed consistent optimism regarding the pipeline for automation projects, though the timing of these projects remains somewhat uncertain.
Looking further ahead, Wolfe Research sees the potential for a surge in customer device refreshes and increased warehouse spending to fuel above-trend organic growth in 2025 and 2026. Many of Zebra's clients last updated their devices in 2018 and 2019 and are now reaching the limits of postponing further updates.
The firm models organic growth rates of 9.6% and 6.2% for 2025 and 2026, respectively, as it anticipates a quicker pace of device refreshes in the coming years.
Despite these optimistic projections, Wolfe Research notes that this would bring Zebra's organic compound annual growth rate (CAGR) from 2019 to 2026 to approximately 3%, which is below the company's long-term growth target of 5-7% overall and 4-5% for the core business. This is also a downturn compared to the approximately 6% CAGR recorded from 2014 to 2019.
InvestingPro Insights
As Wolfe Research upgrades Zebra Technologies (NASDAQ:ZBRA) and sets a robust price target, real-time data from InvestingPro provides additional context to the company's financial health and market performance. Zebra's market capitalization stands at $14.92 billion, reflecting its significant presence in the industry. The company has been trading at a high earnings multiple, with a P/E ratio of 38.51 for the last twelve months as of Q4 2023, suggesting that investors may expect strong future earnings growth.
Notably, Zebra has demonstrated profitability over the last twelve months, and analysts have revised their earnings upwards for the upcoming period, reinforcing Wolfe Research's positive outlook. The stock's price movements have been quite volatile, with a large price uptick of 29.72% over the last six months, indicating investor confidence and market momentum. However, it's important to note that Zebra does not pay a dividend, which may influence investment decisions for income-focused portfolios.
For readers looking to delve deeper, there are additional InvestingPro Tips available that can provide further insights into Zebra Technologies' performance and potential. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to a total of 9 InvestingPro Tips for Zebra Technologies at https://www.investing.com/pro/ZBRA.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.