Sonos (NASDAQ:SONO), the wi-fi speaker firm identified for its good audio system, has been downgraded to ‘Impartial’ from ‘Purchase’ by analysts at Financial institution of America (BofA) Securities as a result of ongoing softness in client electronics spending.
In a observe to shoppers, the BofA analysts additionally lowered their value goal to $12, from $20, citing the lengthy substitute cycle of residence audio merchandise, weak housing turnover, and Sonos (NASDAQ:SONO)’ elevated stock and promotions.
The analysts famous that spending on client electronics and hobbies was down 10% year-over-year in Sonos’ fiscal fourth quarter and turned unfavourable on a four-year foundation for the primary time because the starting of the COVID-19 pandemic.
Channel checks additional confirmed the slowdown, with a number of retailers the analysts spoke with calling out softness in big-ticket client electronics.
Client electronics retailer Greatest Purchase lately said that residence theater has the longest substitute cycle in client electronics, the analysts added.
“We anticipate it can take a number of quarters, if not years, for residence audio gross sales to rebound post-pandemic given their lengthy substitute cycle,” they wrote.
“We beforehand thought Sonos can be immune from business headwinds given its place on the higher finish of the market, however we’re now seeing indicators that its premium pricing is cracking.”
The analysts additionally famous that Sonos’ stock days expanded to 115 in its fiscal 3Q, up from 62 in 3Q 2022. The corporate lately discounted one buy of as much as $2,000 to pick present Sonos customers by a hefty 40%, following a longer-term pattern in direction of extra promotions as demand waned since 2021.
“Though we’re extra cautious on SONO’s near-term earnings given macro/business softness, we stay bullish on the corporate’s long-term development potential as a number one innovator in wi-fi audio,” the analysts concluded.
Sonos’ shares had been down 5.4% at $10.66 in early afternoon commerce in New York.
Contact the creator at stephen.gunnion@proactiveinvestors.com
