UPDATE: Morgan Stanley Downgrades Zebra Technologies (ZBRA) to Underweight Due to Tough Comps
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Morgan Stanley analyst James Faucette downgraded Zebra Technologies (NASDAQ: ZBRA) from Equalweight to Underweight with a price target of $410.00 (from $380.00).
The analyst comments "Digital transformation a long-term positive for ZBRA, but PT ignores there is seasonality to some of the investments. We believe that tough comps in the 2H around the initial impact from $570mm USPS deal, which will cause Y/Y revenue to drop and EPS growth to flatten, is not taken into account in ZBRA's valuation today. ZBRA's multiple has gone to 31x P/E from 18x 24 months ago as rightful enthusiasm around digital transformation initiatives, accelerated by COVID, took root with many retail / logistics organizations. While we believe that all of these initiatives have multi-year legs, boosted by SMB business coming back, we think that investors will be caught off guard by tough comps in the second half and setup for more S&P level EPS growth in 2022, which will cause slight multiple contraction. We could be too conservative if the company were to utilize meaningful cash flow for share repurchases or if other big wins ensue."
Shares of Zebra Technologies closed at $499.56 yesterday.
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Related EntitiesMorgan Stanley, Standard & Poor's
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