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Logitech shares are set to fall as tough economic conditions hit personal computer and video spending, Deutsche Bank said Friday. Analyst George Brown downgraded the stock from Buy to Hold. Brown also cut his price target by CHF14 to CHF54, down 4.7% from Thursday’s close. The previous price target implied that the stock would have risen by 20%. “We are taking great caution with Logitech as the current downturn in the PC market and weakening demand appear to be more severe than expected,” Brown said in a note to customers. US-listed shares fell 5% in premarket trading on Friday. Shares are down nearly 9% in 2023, even as the market as a whole rallied earlier in the year. Logitech’s pre-released fiscal third quarter results showed the company’s revenue was 9% short of expectations. The company said it expects a larger decline in sales than previously anticipated and will also cut its non-GAAP operating profit target by 15%. And he doesn’t just expect problems in 2023. Brown also cut fourth-quarter non-GAAP operating income estimates by 15% from his previous FY2024 guidance. It comes amid broader worries about the personal technology industry as consumers increasingly reconsider large purchases amid inflationary pressures. Industry Research Data IDC’s PC tracking system showed that PC shipments in the fourth quarter of 2022 were down 28% from the same period a year earlier. To be sure, Logitech sales have a historically low correlation with PC shipments, but Brown warned that the correlation gets stronger as the overall economy worsens. Brown said he’s more cautious about his video collaboration market, which he says hasn’t lived up to expectations yet despite its contribution to long-term growth goals. He said the product could lose popularity as the business continues to cut costs. Meanwhile, the company noted continued production challenges due to new Covid outbreaks in China. — Michael Bloom of CNBC
Credit: www.cnbc.com /
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