Company Reports

No-moat Logitech reported strong fiscal third-quarter numbers, with sales broadly in line but gross/operating profits and margins handily beating the FactSet consensus. Furthermore, fiscal 2024 guidance was raised above consensus expectations for non-GAAP operating income. Despite the surprisingly positive results, shares were down around 10% intraday. We surmise the markdown was due to Logitech’s cautious comments on fiscal 2025. While not providing specific numbers, commentary implied minimal growth with high macroeconomic uncertainty in fiscal 2025, while consensus was looking for a solid 5% increase going into the quarter. In contrast to the market, we’re raising our fair value estimate 9% to $60 (CHF 52.50) as our near-term estimates have proven to be too conservative. At current levels, we still think the shares are overvalued.

Logitech, based in Switzerland, is a leader in computer peripherals such as mice, keyboards, and webcams. The company has expanded from being primarily a standard mouse and keyboard producer to new categories such as high-performance gaming products and video conference room cameras, which are the key drivers of its future growth profile.

No-moat Logitech reported strong results in its fiscal second quarter, beating the FactSet consensus on revenue and operating income. Fiscal 2024 guidance was lifted meaningfully on non-GAAP operating income. Consequently, the shares were up around 11% intraday. We are currently updating our model for the latest developments but do not anticipate a material change to our $55 (CHF 50) fair value estimate. At current levels, the shares look overvalued.

We’re initiating coverage of Logitech with a no-moat rating and $55 (CHF 50) fair value estimate. Our fair value estimate implies a 2023 enterprise value/EBITDA multiple of 16.5 times and a P/E ratio of 22 times. Our estimates are broadly in line with FactSet consensus, but we think the shares currently look overvalued. We surmise the market is betting that high margins in the video collaboration segment are more durable than our expectations.

Logitech, based in Switzerland, is a leader in computer peripherals such as mice, keyboards, and webcams. The company has expanded from being primarily a standard mouse and keyboard producer to new categories such as high-performance gaming products and video conference room cameras, which are the key drivers of its future growth profile.