Key Takeaways
- Logitech shares fell 11% today after it guided holiday-quarter sales to anywhere from a 5% decline to flat. That range includes a $70 million to $80 million hit from a chip supplier’s plant incident.
- The chip problem looks temporary, and the market is pricing it like a lasting slowdown.
- Holiday-quarter gross margin is expected to fall to 41% to 42% on higher freight, logistics and material costs, and that’s the part to watch.
- Analysts still expect revenue to grow about 6% in fiscal 2028, which makes the selloff look overdone.
Logitech International (LOGI) is down 11% in premarket trading today, even though its quarter beat estimates.
The problem is the holiday quarter: Logitech expects sales to fall as much as 5%. As CEO Hanneke Faber put it on the company’s second-quarter call, “Q3 carries the brunt of that supplier incident impact.”
What exactly happened
For the quarter ended Sept. 30, reported after Tuesday’s close:
- Sales rose 3% to $1.22 billion, Logitech’s 11th straight quarter of growth.
- Non-GAAP gross margin climbed 1.4 points to 45.2%.
- Adjusted EPS rose 4% to $1.51, well ahead of estimates.
But Logitech guided holiday-quarter sales to anywhere from a 5% decline to flat in constant currency ($1.36 billion to $1.43 billion). That range includes a $70 million to $80 million hit from a chip supplier whose plant closed at the end of June.
The chip problem is shrinking
The plant reopened in September and should be at full production by year-end. The impact should be largely resolved by the fiscal fourth quarter, which ends in March. In July, Logitech warned the hit could reach $200 million, so the hole is far smaller than feared.
Demand looks fine, too. Faber noted that pointing devices and keyboards grew mid-single digits even as global PC shipments fell 20% in the quarter.
Analysts still expect sales to grow, to $4.91 billion this fiscal year and $5.20 billion in fiscal 2028, about 6% growth…
And with the chip hit largely gone by March, nothing in this guide should pull fiscal 2028 down.
TIKR tracks 10 analysts on Logitech International. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Logitech International, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Logitech International’s Analyst Ratings
The margin squeeze is the stickier part
Q2’s 45% gross margin topped every full year since at least fiscal 2022, when the best was fiscal 2026’s 43.4%…
Logitech guided holiday-quarter gross margin to 41% to 42%, about 2 points lower than a year ago. Most of that comes from higher freight, logistics and material costs, plus about half a point of extra promotions. Those costs won’t fix themselves when the chip plant catches up. Still, Logitech expects its full-year operating margin at the high end of its 15% to 18% target range.
Now a little cheaper than usual
Logitech traded at 20x forward earnings at Tuesday’s close, a touch above its five-year average of 19x…
After today’s drop, it’s closer to 18x.
My take: the market is pricing a one-quarter supply problem like a lasting slowdown, and I think the selloff is overdone.
Of course, if the plant misses its year-end target or freight costs keep climbing, the fourth quarter could disappoint too. The holiday-quarter report in late January will tell.
So what is Logitech stock actually worth?
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Disclaimer:
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