UPDATE: UBS Upgrades Logitech International SA (LOGN:SW) (LOGI) to Buy, 'Strong cash flow prospects not reflected in shares'
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UBS analyst Joern Iffert upgraded Logitech International SA (LOGN:SW) (NASDAQ: LOGI) from Neutral to Buy with a price target of CHF73.00 (from CHF81.00).
The analyst comments "The Logitech share price has declined c50% from its peak in mid-2021. However, we think in addition to priced-in pulled-forward demand risks in some segments (eg, webcams), the recent share price decline linked to macro risks and overall sales resilience is overdone. The hybrid working environment and solid consumer gaming trends medium term offer some robustness. The B2B expansion offers additional prospects. In addition, Logitech has a strong FCF ROIC of >80%, reflecting high economic value add. Its sound cash conversion results in a net FY 25E cash position (before dividends and buybacks) of cUS$3.5bn, c35% of the market cap. This offers cash return and M&A prospects. The stock trades at FY 23E (end March) c7% EFCF yield and c16x PE ex net cash (lower end of historical trading range), which is compelling in our view. We upgrade Logitech to Buy from Neutral. Logitech is not immune to rising macro risks, hence we cut our FY 23-24E EPS by -17% and -13% and trim our PT to CHF73."
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