Investing.com -- Bank of America downgraded Logitech (NASDAQ: LOGI) to Underperform from Neutral and slashed its price objective by 18% to CHF70/$86 from CHF85/$108, warning that demand for the Swiss peripheral maker’s products is set to deteriorate materially over the next 12 to 18 months as hardware price hikes ripple through the consumer electronics ecosystem.

The company’s U.S.-listed shares slid 5.2% in premarket trading by 06:23 ET (10:23 GMT).

The bearish call rests on the bank’s view that price increases of 5% to 20% across PCs, tablets, smartphones, and gaming systems, driven by higher memory costs at major OEMs, will weigh on appetite for Logitech’s complementary accessories, including gaming peripherals, pointing devices, webcams, and headsets.

"Demand for Logitech products is likely to worsen materially over the course of the next 12-18m given material price hikes across PCs, tablets, smartphones and gaming systems," analysts led by Didier Scemama said in a note.

BofA reduced its fiscal 2027 (FY27) through FY29 EPS estimates by 6.3% to 10.7%, arriving at projections of $5.33/$5.23/$5.54 for those respective years — placing BofA 9.4% to 20.5% below consensus.

On the revenue side, Bank of America models FY27 sales of $4.8 billion (flat year-over-year), FY28 revenue of $4.6 billion (down 4.1%), and a modest FY29 recovery to $4.8 billion (up 3.4%), a trajectory running 3.6% to 13.3% below consensus across the period.

Underpinning the revenue pessimism is a gloomy PC unit outlook from BofA’s internal hardware analyst Wamsi Mohan, who projects global PC volumes will contract 8% in calendar year 2026 before recovering modestly at 2.4% to 2.9% growth in CY27 and CY28.

At BofA’s revised CHF70 price objective, Logitech would trade at 13x FY28E EV/EBITDA, stepped down from the prior multiple of 14.5x and sitting at the lower end of its historical 10x to 21x range due to declining revenue and earnings.

The gross margin outlook adds another layer of risk. BofA’s base case assumes Logitech management can defend gross margins above 43%, citing the strength of the company’s product lineup.

But at the same time, the analysts warn that "consumers could prefer to buy lower priced devices which could push GMs down to high-30%/low-40%." A shift toward cheaper alternatives would compress margins well beyond what the base case pencils in.

Bank of America models operating expenses declining 2.8% to 10.5% across the FY27 to FY29 window, but the bank is candid about the limits of that assumption.

"While we are confident that management can find additional efficiencies in G&A, we are somewhat concerned that marketing expenses and promotional activities might remain more elevated than we model given likely weaker demand," the analysts wrote.

"Both cost lines could create additional downside to our estimates in our view," they added.