Zebra Technologies Corporation, based in Lincolnshire, Illinois, has experienced significant stock decline despite reporting better-than-expected quarterly financials. Over the past year, Zebra’s stock (ZBRA) has plummeted by 40.6%, a stark contrast to the S&P 500 Index’s gain of 10.5% during the same period. The company, which specializes in enterprise asset intelligence solutions, currently boasts a market capitalization of $11.7 billion and operates through two primary segments: Asset Intelligence & Tracking and Enterprise Visibility & Mobility.
The stock’s decline continued even after Zebra Technologies released its third-quarter results on October 28, 2023. Following the announcement, ZBRA shares fell by 11.7% in trading. The company reported a 5.2% year-over-year growth in net sales, reaching $1.3 billion, exceeding analysts’ expectations by 71 basis points. Additionally, Zebra’s adjusted earnings per share (EPS) rose by 11.2% year-over-year to $3.88, surpassing consensus estimates by 3.5%.
Despite these positive financial metrics, investor sentiment soured due to the company’s outlook for the fourth quarter. Zebra anticipates sales growth of 8% to 11% year-over-year, but this projection includes an 8.5% beneficial impact from acquisitions and foreign currency translation. For the full fiscal year ending in December 2025, analysts expect an adjusted EPS of $15.83, reflecting a 17.1% increase year-over-year.
Zebra Technologies has a history of exceeding earnings expectations, having surpassed analysts’ bottom-line estimates in each of the past four quarters. As of now, the consensus rating among the 17 analysts covering ZBRA is a “Moderate Buy.” This rating is based on 10 “Strong Buys,” one “Moderate Buy,” five “Holds,” and one “Strong Sell.” Notably, this analysis shows a slight decrease in optimism compared to a month ago, during which no analysts recommended a “Strong Sell.”
On October 29, 2023, Truist Securities analyst Jamie Cook reaffirmed a “Hold” rating on ZBRA, adjusting the price target from $350 to $331. Currently, the mean price target for ZBRA stands at $360.50, indicating a potential 57.8% upside from current levels. The highest target, set at $421, suggests an impressive potential upside of 84.3%.
As Zebra Technologies navigates these financial challenges, the market will be closely watching how the company addresses investor concerns and adapts to changing economic conditions.
