Logitech International S.A.

LOGI Details

Logitech International S.A. (NASDAQ: LOGI) is a  holding company that creates, manufactures, and sells products that link people through music, gaming, video, computer, and other digital platforms. The business is run through a peripheral sector. The Company sells its products to many local and foreign customers, including direct sales to retailers, e-tailers, and distributors. Consumer electronics distributors, retailers, mass merchandisers, specialized electronics stores, computer and telecommunications stores, value-added resellers, and online merchants make up the Company's global retail network.

Latest News:

• Launch of Ergonomic Mouse: On April 19, 2022, LOGI launched the Lift Vertical Ergonomic Mouse, a wireless mouse designed for all-day comfort at the desk. The lovely, naturally contoured design is available in three beautiful colorways: rose, off-white, and graphite, and is an excellent fit for small to medium-sized hands. In North America and Europe, the graphite hue is also available in a left-handed form.

Q3FY22 Results:

• Flat Topline: The company reported a YoY decline of 2.07% in revenues to USD 1.63 billion in Q3FY22 (ended December 31, 2021) compared to USD 1.67 billion in Q3FY21, driven by 29.02% growth in Keyboards & Combos.
• Decline in Profitability: However, LOGI witnessed an decrease in net income to USD 210.01 million in Q3FY22 vs. USD 382.52 million in Q3FY21.
• Healthy Balance Sheet: As of December 31, 2021, the company had a cash balance of USD 1.36 billion with no outstanding debt.

Key Risk:

• Supplier Concentration Risk: LOGI is dependent on a limited number of suppliers for its raw material needs. Also, some of its manufacturing equipment are sourced from a single vendor. Any failure on the contractual obligation by vendors could harm its operations.

Outlook:

FY22 Outlook (Source: Q3FY22 Earnings Presentation, January 24, 2022)

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

LOGI' stock price has fallen 41.73% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 67.36 to USD 140.17. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 86.53.

Considering the significant correction in the stock price, debt-free balance sheet, strong margins, current valuation, and associated risks. We recommend a "Buy" rating on the stock at the closing price of USD 70.10, down 0.79% as of April 21, 2022.

Three-Year Technical Price Chart (April 21, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.