Sonos Shares Rally 5% After Earnings Beat, Analysts See no Slowdown in Demand

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SONO reported an adjusted EPS of 26c in the second quarter, down from 31c in the year-ago period but above the consensus estimates of 17c per share. Revenue came in at $399.8 million, up 20% YoY and above the analyst consensus of $351.7 million. Adjusted EBITDA stood at $46.9 million, down 3.4% YoY and above the consensus projection of $34.6 million.

For the full fiscal year, Sonos expects revenue in the range of $1.95 billion to $2 billion, compared to the analyst expectations of $1.98 billion. The company expects FY adjusted EBITDA between $290 million and $310 million, compared to its previous forecast of $290 million to $325 million, while analysts are looking for $307.7 million.

Sonos said it plans to launch a voice assistant feature called Sonos Voice Control which will become available on its devices on June 1. The company also introduced a new low-cost ray sound bar, priced at $279.

“Homes have become movie theaters, fitness studios, gaming hubs and so much more, all supported by a streaming era that is no longer exclusive to just TV, music and film,” said Patrick Spence, CEO of Sonos.

Goldman Sachs analyst Rod Hall cut the price target to $24.00 per share from $32.00 on Neutral-rated SONO stock. Still, he weighed in positively on results.

“On the demand front, we note that the positive commentary from Sonos is consistent with that from Apple (NASDAQ:AAPL) and Qualcomm (NASDAQ:QCOM). We believe this underscores that the higher end consumer remains fairly resilient in spite of weakness developing at the lower end of the consumer economy. However, given world events and the risk of economic slowdown we remain on the sidelines on Sonos’ stock until the medium term trajectory of demand for their products becomes clearer,” Hall said in a client note.

BofA analyst John Babcock cut the price target to $34.00 per share from $35.00 but remains Buy-rated amid “solid” demand.

“SONO is continuing to experience better than-expected demand for its products. Recall, heading into earnings we noted in our F2Q22 preview that the stock implied a meaningful drop in EBITDA, and that growth and supply chain concerns were amply reflected in the stock. Ultimately, SONO’s results and latest guidance were supportive of our thesis… While we do see risk that demand could slow, we’d note that SONO should have good visibility on demand levels for F3Q and even into F4Q, giving us confidence in its guidance,” Babcock told clients.

By Senad Karaahmetovic

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