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Needham analyst James Ricchiuti maintained Zebra Technologies Corp (NASDAQ:ZBRA) with a Buy and lowered the price target from $285 to $255.
The tone of ZBRA’s Q323 call was consistent with the company’s prior expectations for improvement in distributor destocking exiting Q4. However, Street expectations for 2024 at the high end had assumed too strong a recovery in demand.
ZBRA said demand across its end markets and regions remained soft in Q3, sounding cautious looking to the first half of 2024.
Q3 revenues were above the midpoint of guidance and 3% above consensus. Cost actions drove EPS modestly above consensus and the midpoint of guidance.
ZBRA guided Q423 revenues to decline 32% - 36% Y/Y, at the midpoint in line with consensus expectations of -32%.
The analyst notes that investors will increasingly focus on the potential for a recovery in the second half of 2024.
He projects Q4 revenue of $993 million (consensus $1.02 billion) and EPS of $1.65 (consensus $1.69).
Stephens & Co analyst Tommy Moll reiterated Zebra Technologies with an Overweight and lowered the price target from $350 to $300.
The re-rating reflects continued limitations to visibility toward retail/e-commerce recovery.
Looking ahead, positive catalysts could include visibility to end market inflections as 2024 customer capex budgets are locked in, potential budget flush activity in 4Q, and impending customer refresh cycles.
The analyst projects Q4 revenue of $992 million and EPS of $1.60.
KeyBanc analyst Kenneth Newman maintained a Hold rating on Zebra Technologies.
ZBRA shares were mixed following its 3Q23 results that beat consensus for the quarter but included new 4Q23 guidance below expectations.
The company continues to face challenges from weaker demand (particularly within E-Commerce and Transportation/Logistics) and distributor destocking as customers scale back budgets and work through elevated inventory levels.
While Newman notes that sales deceleration may be closer to the bottom than not, limited visibility makes it difficult to predict an inflection of customer demand. As such, a conservative approach is prudent.
The analyst projects Q4 revenue of $995.8 million and EPS of $1.60.
Price Action: ZBRA shares traded lower by 6.66% at $195.48 on the last check Wednesday.
Posted In: ZBRA
