Logitech Stock Soars On Second Round Of Work-From-Home Tech Sales

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Logitech International , a maker of peripherals for PCs and other devices, surprised Wall Street with much better-than-expected fiscal second-quarter results as it continues to benefit from the work-from-home trend. Logitech stock rocketed on the news Tuesday.

 

 

 

Late Monday, Logitech reported adjusted earnings of $1.87 a share on sales of $1.26 billion for the quarter ended Sept. 30. Wall Street had predicted Logitech earnings of 57 cents a share on sales of $834.6 million. On a year-over-year basis, Logitech earnings surged 274% while sales climbed 75%. Its third quarter was the fourth consecutive period of accelerating sales and earnings growth for the company.

 

The fastest-growing product category in the third quarter was PC webcams, where sales jumped 256% from the same quarter last year to $102.5 million. Video collaboration product sales popped 164% year over year to $236.7 million. Tablet and other accessories rose 145% to $83.1 million, Logitech said.

 

On the stock market today, Logitech stock soared 15.8% to close at 92.64. Earlier in the session, it blasted 19.6% higher to a record 95.70.

Home Workers Are Upgrading Their Webcams, Microphones

Logitech Chief Executive Bracken Darrell told Investor's Business Daily that the company is seeing a second round of people buying webcams for videoconferencing.

 

During the first round this spring, after the Covid-19 pandemic forced many people to work from home, customers bought basic devices to do Zoom calls. Now people are upgrading to better webcams and microphones because they didn't like how they looked or sounded, Darrell said.

 

Darrell expects the Covid-19 situation to continue for a while, and many customers will insist on working from home.

 

"The genie is out of the bottle," Darrell said. "People like being able to work from home."

Remote Learning, Gaming Also Lift Logitech Stock

Logitech also got a lift in the third quarter from parents equipping their children for back-to-school season, Darrell said. Like their parents, many children are stuck at home during the pandemic and doing remote learning.

 

Plus, gaming device sales remain strong as more people choose home entertainment over social gatherings during the pandemic. Logitech's gaming peripheral sales rose 85% to $297.7 million in the third quarter.

 

Logitech also raised its outlook for the current fiscal year. It now expects sales to rise 35% to 40% in constant currency, vs. its earlier target of 10% to 13% growth.

 

The company expects to generate adjusted operating income of $700 million to $725 million, vs. its prior range of $410 million to $425 million.

Logitech Stock Upgraded To Buy

JPMorgan analyst Paul Chung upgraded Logitech stock to overweight from neutral after the earnings report.

 

A hybrid work-from-home and office situation looks like it is "here to stay," even when Covid restrictions are lifted, Chung said.

 

Chung also likes Logitech's improving profitability and growing war chest for possible acquisitions.

 

He raised his price target on Logitech stock to 100 from 70.

 

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