Equities

Logitech Falls 6.1%, Analysts Cut Target Amid Slow Growth

Logitech stock dips 6.1% amid CFO departure and lowered revenue growth forecast, with Morgan Stanley cutting target to $75.

By Barry Stearns

4/15, 13:20 EDT
Logitech International S.A. - Registered Shares
Morgan Stanley
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Key Takeaway

  • Logitech's stock falls 6.1% to $81.56 after CFO Charles Boynton announces departure, marking a series of executive exits.
  • Morgan Stanley downgrades Logitech to Underweight, cuts price target to $75, citing slower expected revenue growth at 3% annually through 2027.
  • Despite challenges and executive instability, Logitech focuses on M&A for growth but faces skepticism over its effectiveness amidst market headwinds.

Leadership Changes and Market Reaction

Logitech International, a leading manufacturer of computer peripherals such as headphones, mice, and webcams, has experienced a notable decline in its stock value following the announcement of Chief Financial Officer Charles 'Chuck' Boynton's departure. Boynton, who took on the CFO role in 2023, will be leaving the company to pursue another opportunity but will remain through mid-May to assist with the transition. This news led to a sharp decrease in Logitech's shares, falling 7.2% to $87.69 in premarket trading and then down 6.1% to $81.56 in Monday afternoon trading, marking the stock's lowest close since November 10, 2023. The departure of Boynton adds to a series of executive exits at Logitech, with four key executives, including the current CFO, resigning in the last 18 months.

Financial Outlook and Analyst Perspectives

Morgan Stanley analyst Erik Woodring has downgraded Logitech stock to Underweight from Equal Weight, with a price target cut to $75 from $85, indicating a potential 14% decline from the stock’s closing price on Friday. Woodring's outlook is based on an expectation of Logitech achieving a 3% annual revenue growth through 2027, which falls significantly below the company's long-term growth target of 8%-to-10%. He cites competition and the end of Covid-19 influenced purchases for at-home work as key headwinds that will limit Logitech’s revenue growth. Despite these challenges, Logitech has reiterated its full-year outlook, expecting sales of between $4.2 billion to $4.25 billion in fiscal 2024, a decrease of at least 6% from a year ago.

Strategic Initiatives Amidst Uncertainties

In response to the evolving market dynamics and internal changes, Logitech has emphasized mergers and acquisitions as a "key tenet" to its growth strategy. However, Woodring expresses skepticism regarding the feasibility of large M&A activities given the recent instability in the company's executive team. He suggests that Logitech's shareholders might prefer more capital returns, such as share buybacks, over mergers and acquisitions. This strategic direction comes at a time when Logitech, along with other tech companies, faces "a number of headwinds and uncertainties" that may impact its future net sales, as stated in the company's January announcement.

Street Views

  • Erik Woodring, Morgan Stanley (Bearish on Logitech):

    "Competition and the end of Covid-19 influenced purchases for at-home work are headwinds that will limit Logitech’s revenue growth... Until there is greater stability in the C-suite, we believe large M&A is off the table."

Management Quotes

  • Charles Boynton, CFO of Logitech:

    "Mergers and acquisitions will be a key tenet to growth."