Computer peripheral maker Logitech (NASDAQ: LOGI) defied expectations in one major way in trading today. The company was up 7% in pre-market trading on Tuesday and built on those gains throughout today’s trading session so far. Normally, when a company issues an earnings report that fails to meet consensus on at least one point, the stock plunges. The exact opposite happened to Logitech.
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The company posted $0.84 per share in earnings, though expectations were $0.85 per share. However, other figures, like the Zacks consensus, were only looking for $0.81 per share. However, revenue didn’t turn out near so close. The company posted $1.15 billion for the quarter, but estimates looked for $1.2 billion.
Logitech’s sales have been on the decline for some time now, and that isn’t really a positive for the company. However, Logitech also spent some time as a “pandemic darling,” with its sales artificially inflated by lockdowns and people needing to stay home more.
While Logitech likely won’t recover to its previous price levels any time soon, it has a good chance of recovering in general. I’m bullish on Logitech. It may not hit the $80 mark again, but looking for a $60 might not be out of line.
Is LOGI Stock a Good Buy, According to Analysts?
Turning to Wall Street, Logitech has a Moderate Buy consensus rating. That’s based on seven Buys, two Holds, and two Sells assigned in the past three months. The average Logitech price target of $61.65 implies 20.8% upside potential. Analyst price targets range from a low of $36.02 per share to a high of $85 per share.
Also, Logitech has a Smart Score of 7 out of 10 on TipRanks. That’s the highest level of “neutral,” which suggests that the company has a slight chance of outperforming the broader market.
Diversification Ahead for Logitech
While Logitech managed to defy conventional logic this morning by having its share price blast up on the strength of a mixed earnings report, there’s a good reason for it. The reason isn’t “the markets are bizarre these days.” They are, but that’s largely beside the point.
Logitech is operating under conditions right now that are largely unique to itself and other companies like it. Sometimes called “pandemic darlings,” these companies saw their sales spike during the COVID-19 pandemic.
As more workers worked from home and more kids were kept home from school, the need for computer peripherals like mouse devices and the like spiked accordingly.
After the pandemic’s retreat and mutation into a host of less-dangerous versions, the demand for computer peripherals fell accordingly.
People had what they needed. What they had didn’t need replacing just yet. Therefore, sales plunged accordingly from what was basically an artificial high. That hurt companies like Logitech, who enjoyed the surge but are now seeing the crash.
However, Logitech has a plan to fend off this crash. The plan features a string of new or recently-unveiled products that will hopefully spark buyer interest. One development recently reviewed was Logitech’s G Cloud.
Coupled with the Shadow cloud computing service, TechCrunch referred to it as “a match made in gaming cloud heaven.” That’s largely due to how well the combination works overall.
Given the rise of cloud gaming, however, that could be a big move for Logitech. Cloud gaming was recently valued at around $609.67 million. By 2028, however, that number is expected to surge to just under $7.4 billion.
That’s just for starters. Logitech also has a set of peripherals for the latest version of Apple’s (NASDAQ: AAPL) iPad, including a keyboard case and the “Logitech Crayon,” a stylus tool used to simulate writing. It also stepped up its partnership with Herman Miller to roll out a new gaming chair dubbed the Vantum.
Logitech even went so far as to roll out a new camera for hybrid work meetings. The Logitech Sight camera turns to AI to offer an “at the table” style of experience to remote workers who are attending conferences with employees who came back to the office.
It’s unclear just how much impact these devices will have on the next quarter’s sales. However, what’s much clearer is that Logitech has a plan in place to take some of the brunts out of lopsided comparisons to a wholly unique time in human history. That’s good news for Logitech and good news for its investors.
Conclusion: Don’t Call It a Comeback. Logitech Never Really Left.
Right now, things are indeed bizarre in stocks. Results that should have earned plunges prompted jumps instead. Companies that should be darlings are traded like disasters. For Logitech, however, a lot of the strangeness we’re seeing is likely temporary.
There’s a lot of reason to be bullish on Logitech. The company is trading well under its average price target. It’s coming off its 52-week lows, really, and with the company now trading at just over $50 per share, it’s a safe bet a retracement to at least $60 is at hand.
Follow that up with the sheer number of new products coming out. Logitech isn’t just counting on mouse devices and cameras and everything it sold for the pandemic three years ago. It’s bringing out new devices everywhere.
Logitech is making itself a growing part of the gaming market, which is huge in and of itself. It’s also throwing its weight around in teleconferencing, which is likely to be part of the landscape for some time to come.
That’s thanks to employees’ lack of interest in coming back to the office. As recently as September, 61% of workers wanted to work remotely indefinitely.
Logitech is positioning itself to not just be a pandemic darling flash-in-the-pan but also the go-to provider of peripherals for gaming and telecommuting. That’s a huge potential position. Given Logitech’s pricing right now, it’s worth considering a buy, and that’s why I’m bullish.
