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Photograph of Gabby Jones / Bloomberg
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His bone
does not deserve the trade as his peers from the consumer electronics
Go Pro
and Arlo, according to an analyst, who points to its higher growth rate and new product and partnership opportunities.
Raymond James on Monday raised the title of the company multiroom intelligent (symbol: SONO) to the highest rating of the firm, raising it by more than 10%, to reach $ 13.20 recently. The Russell 2000 Small Cap Index rose 1.3%.
The story back. Sonos was released last August after setting an estimated value of around $ 1.5 billion. The skeptical reception of potential investors on her roadshow led her to lower her valuation before setting the price of her shares at $ 15. On the second trading day, they peaked at over $ 23, before starting a long decline.
Sonos technology allows users to connect multiple speakers in their home to play the same music simultaneously and stream songs from services such as Spotify (SPOT) and Sirius XM (SIRI) Pandora. A pair of speakers designed and sold by IKEA was launched earlier this year. Bearish investors focused on the threat of competition from smart speakers for Sonos –
Amazon
has been extended to more devices, and
Apple
(AAPL) and Google devote their attention to home audio products. But so far, Sonos' sales growth has continued.
What's up. This justifies a higher valuation of its stock than other mainstream niche device companies, such as the maker of smart appliances for Arlo home (ARLO) and the manufacturer of cameras and TVs. GoPro drones (GPRO), wrote Monday morning to analyst Raymond James Adam Tindle. He raised the Sonos title of Outperform at the highest level of the company, Strong Buy.
Compared to a GoPro peer group, Arlo,
I robot
(IRBT)
Fitbit
(IN SHAPE),
Garmin
(GRMN), and
Logitech
(LOGI), the Sonos share trades at a discount of approximately 20% on the value of the business in terms of turnover and on the value of the company in multiples of the gross margin. And this despite better prospects for sales growth through its partnerships and its successive buying trends, by Tindle.
"We view the IKEA partnership as a testament to Sonos' ability to adapt its technology and brand to adjacent and non-traditional markets," Tindle wrote on Monday. "Sonos now has more than 8 million homes and the time to the next million homes has dropped dramatically."
Look forward. Tindle has a price target of $ 19 on the Sonos stock, about 46% higher than its recent $ 13. He expects Sonos to launch a new product later this month – possibly for an outdoor speaker – and notes that about 35% of Sonos' revenues come from regular customers . An average household adds a second or third Sonos product to their home a few years from their initial purchase. About 60% of existing customers currently have only one or two devices. The addition of a new category of speakers could encourage more users to add another to their home.
And when it comes to fierce competition from tech giants Amazon and Google, Tindle has referred to Sonos' track record so far.
"[Since] the introduction of Alexa in 2014 … despite multiple product versions, discounts, bundles, etc., competing, Sonos has always generated about 10% [annual revenue growth] during this period, growth accelerated shortly after the release of Echo Dot from Amazon at low cost, "writes Tindle. "We think the assessment is currently stuck in this bear story."
The Sonos stock has increased 21% this year compared to last week, compared to 12% for the Russell 2000.
Write to Nicholas Jasinski at [email protected]
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