Logitech Lifts FY21 & Long-Term Outlook; Street Sees 10% Upside


Logitech lifted its financial outlook for FY21 and raised its long-term financial targets as well. The manufacturer of computer peripherals and software also provided guidance for FY22.

Logitech (LOGI) projects FY21 sales to grow approximately 63% year-over-year on a constant currency basis, up from its earlier guidance range of 57%-60%. Moreover, it expects adjusted operating income to be $1.1 billion, higher than its previous estimates of $1.05 billion.

The company increased its long-term sales growth projection to the 8%-10% range, up from its earlier growth guidance of a high-single-digit rate. It now expects non-GAAP gross margins to be between 39% and 44%, higher than its previous guidance range of 36%-40%. The adjusted operating margin is now estimated to be in the 14%-17% band, significantly higher than its previous expectations of 11%-14%.

For FY22, Logitech forecasts sales to remain flat (+/- 5%) year-on-year. Adjusted operating income is anticipated to be between $750 million and $800 million, reflecting a significant year-over-year decline from FY21 expectations. (See Logitech stock analysis on TipRanks).

The company said that the decline in FY22 operating income reflects continued investments in hardware and software innovation as well as enhancing marketing and go-to-market capabilities.

Furthermore, Logitech noted that video collaboration, remote working, esports, and digital content creation trends have accelerated in FY21. The company foresees strong growth opportunities amid these trends.

On Jan. 20, Citigroup analyst Asiya Merchant raised the stock’s price target to $130 (20% upside potential) from $110 and reiterated a Buy rating. Merchant opines that Logitech is better positioned in the tech hardware space to benefit from secular industry tailwinds. In a note to investors, the analyst stated that the company continues to demonstrate “strong operational execution coupled with strong underlying mid-term growth trends.”

Overall, the Street has a cautiously optimistic outlook on the stock with a Moderate Buy consensus rating based on 3 Buys and 2 Holds. The average analyst price target of $118.98 implies upside potential of about 10% to current levels. Shares have skyrocketed over 175% over the last year.

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