Logitech LOGI shares have plunged 13.3% in the past six months, underperforming the Zacks Computer Technology sector and the S&P 500’s return of 14.7% and 14.1%, respectively. LOGI also underperformed the Zacks Computer - Peripheral Equipment industry’s decline of 13.2% in the past six months.
Given Logitech’s position as one of the established players in the computer peripheral market, this underperformance is disappointing. This raises a crucial question for investors: Is it the right time to buy or sell LOGI stock?
LOGI Faces Competitive and Economic Pressures
Logitech has been a recipient of the challenges posed by the weakening global economy amid ongoing macroeconomic uncertainties and geopolitical issues. These factors have affected consumer spending leading to lower consumption of consumer electronics, negatively impacting Logitech’s top line throughout the fiscal 2024.
LOGI is also facing headwinds from the growing popularity of smaller and mobile computing devices with touch interfaces, which is diminishing the demand for desktop PCs — Logitech's primary market for peripheral products.
The market where Logitech operates is highly competitive and characterized by short product life cycles. The peripheral market is also treaded with multiple competitors including Bose, Sony Group SONY, Apple AAPL, Corsair CRSR, Microsoft, Philips, HP, Dell, Cisco and many more.
HP and Dell produce pointing devices, keyboards and other peripheral equipment like Logitech. Sony, Bose and Corsair have their impressive lineup of headsets and Cisco competes with Logitech in the webcam market. These brands constantly launch new products, rapidly change technology per the evolving customer demands, and promote through aggressive promotional and pricing practices.
These factors also force Logitech to take in aggressive marketing tactics. Logitech’s marketing and selling costs have been on a rising trend for the past eight quarters.
Logitech 6 Month Performance
Image Source: Zacks Investment Research
Strong Portfolio and Partnerships Aid LOGI
All these challenges have not stopped Logitech from improving its revenues. LOGI’s revenues are on the path of recovery. Amid all the above headwinds, Logitech is navigating the computer peripheral market with innovative product launches. In the past year, Logitech has launched several innovative audio equipment that include EVERBOOM portable speaker with 360° sound, EPICBOOM Bluetooth speaker, Logitech G ASTRO A50 X LIGHTSPEED wireless headset, Zone Wireless 2 headsets for work and software like Streamline plugin for Loupedeck users.
Alongside its audio portfolio, LOGI has also enriched its consumer electronic portfolio, including gaming products and office work accessories. Logitech has stormed the gaming market with LIGHTSPEED Gaming Mouse, Logitech G515 next-generation gaming keyboard and PRO X 60 Gaming Keyboard.
So far this year, Logitech contributed to the webcam market with its AI-powered USB conference camera, MeetUp 2. Other webcams include MX Brio/MX Brio 705 for Business and Mevo Core 4K camera. With all these innovations in place, Logitech is expected to serve a wide customer base.
For the office electronic accessories market, LOGI launched the Casa Pop-Up Desk, Signature Slim K950, Slim Combo and Slim Combo for Business keyboards. Furthermore, Logitech dedicated an entire lineup of products for Apple’s Mac under the brand Logi for Mac products.
To gain market share among Apple users, Logitech has enhanced the compatibility of its product lineup with Mac OS and iPadOS. Logitech has launched dedicated macOS keyboards for the Apple ecosystem. LOGI’s portfolio for Mac users includes MX Anywhere 3S keyboards, MX Keys S, MX Keys S Combo, MX Keys Mini and Ergo Series Wave Keys.
In the past couple of years, LOGI has certified its peripherals to work seamlessly with Microsoft and Intel products. It gained certifications from these industry leaders for its peripherals.
Logitech has certified its Sight AI Camera from Microsoft Teams. LOGI also verified its mouse and keyboard for Intel Evo laptops that meet strict requirements for reliability, interoperability and security.
With all these innovative products in place, Logitech expects fiscal 2025 sales in the band of $4.39-$4.47 billion. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $4.39 billion, indicating year-over-year growth of 3.11%.
The Zacks Consensus Estimate for LOGI’s fiscal 2025 earnings is pegged at $4.48, suggesting year-over-year growth of 7.8%.
What Should Investors Do?
Although Logitech faces stiff competition and macroeconomic challenges, the company is on the path of recovery on the back of its innovative products. LOGI is also fairly valued at present with Zacks’s Value Score of B.
Considering all these factors, we suggest investors to buy this Zacks Rank #2 (Buy) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
