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Sonos Plunges as Weak Demand Prompts Outlook Cut, Analyst Seeks to See More Stabilization in Business

August 11, 2022 7:32 AM EDT
Get Alerts SONO Hot Sheet
Price: $14.39 +0.14%

Rating Summary:
    4 Buy, 4 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 11 | Down: 15 | New: 37
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Shares of Sonos (NASDAQ: SONO) are down over 17% after the audio-products maker cut its full-year outlook for revenue and adjusted Ebitda.

Sonos reported a Q3 EPS of $0.19 to easily beat the analyst estimate of $0.06. However, revenue for the quarter came in at $371.8 million versus the consensus estimate of $424.03 million.

The company blamed softer revenues on the strong dollar and inflation pressuring consumer sentiment. As a result, SONO also slashed full-year adjusted Ebitda forecast to $215 million to $230 million from $290 million and $310 million. Full-year revenue is seen between $1.73 billion and $1.76 billion, down from the prior guidance of $1.95 billion to $2 billion.

Analysts were looking for an adjusted Ebitda of $302.6 million on sales of $1.98 billion.

“Due to the uncertain and evolving macroeconomic backdrop, the timeline to achieve the Company’s previously issued targets of $2.5 billion revenue, 45-47% gross margins and 15-18% Adjusted EBITDA margins is being extended beyond FY2024,” the company said in a press release.

Stifel analyst cut the price target to $20 from $24 on Hold-rated Sonos, which mirrors lowered forward estimates that, on the other hand, reflect the weaker outlook.

Raymond James analyst Adam Tindle also maintained a Market Perform rating on the SONO stock.

“We previously cited the “wall of worry” that the initial F2H guide created, and this has since come to fruition as consumer behavior deteriorated in June leading to disappointing results alongside an ERP change, and a CFO departure announcement alongside an indefinite pushout of FY24 targets put salt in the wound. While we expect a rightful reset in shares following this report (EBITDA guide down >20%), we await more stabilization in the business to make a tactical call, and traction in Services to make a structural call on the stock,” Tindle wrote in a note.

By Senad Karaahmetovic



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