Logitech LOGI stock has dropped 13% this year, lagging behind the Zacks Computer Technology sector and the S&P 500, which saw returns of 33.4% and 26.3%, respectively. As a well-known player in the computer-peripheral market, this decline raises a key question for investors: Is now the time to buy or sell?
LOGI Faces Challenges in a Tough Market
Logitech is encountering a range of difficulties, from the slowing global economy to ongoing geopolitical issues in Europe. As consumer spending diminishes, demand for electronics drops, negatively impacting Logitech’s revenue for fiscal 2024.
The company operates in a fiercely competitive market dominated by major brands like Bose, Sony Group SONY, Apple AAPL, Corsair CRSR, Microsoft, and Dell. With rapid product cycles in the peripheral market, Logitech must consistently invest in new products, leading to increased operating costs. The last eight quarters have seen its marketing and selling expenses rise as well.
In the pointing device sector, Logitech competes against other significant players such as HP and Dell. Meanwhile, brands like Sony, Bose, and Corsair offer competitive headsets, while Cisco challenges Logitech in the webcam domain. This environment creates constant pressure through new product launches, competitive pricing, and aggressive marketing efforts.
Additionally, the popularity of smaller devices with touch interfaces is impacting the demand for traditional desktop PCs. Given Logitech’s focus on PC peripherals, this trend creates further challenges for its sales.
Logitech Price Performance Chart
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Innovation Sparks Revenue Recovery for LOGI
Despite these hurdles, Logitech’s revenue is beginning to bounce back thanks to innovative product releases. Throughout 2024, the company has introduced a range of new audio products, webcams, headsets, and other electronics.
Recent product additions include the EVERBOOM portable speaker with 360° sound, the EPICBOOM Bluetooth speaker, and the Logitech G ASTRO A50 X LIGHTSPEED wireless headset, along with the Zone Wireless 2 headsets designed for professional use.
In the consumer electronics segment, Logitech has made waves in the gaming market with the LIGHTSPEED Gaming Mouse, the next-generation Logitech G515 keyboard, and the PRO X 60 Gaming Keyboard.
So far this year, Logitech has also rolled out several webcams, including its AI-powered USB conference camera, MeetUp 2, and others like the MX Brio series. These innovations aim to attract a broader customer base.
For office accessories, the company introduced the Casa Pop-Up Desk and a variety of keyboards, particularly under the Logi for Mac brand targeted at Apple users.
With all these new products, Logitech expects fiscal 2025 sales to fall between $4.39 billion and $4.47 billion. The Zacks Consensus Estimate for fiscal 2025 revenues is $4.43 billion, suggesting a year-over-year increase of 3.11%.
Furthermore, the Zacks Consensus Estimate for LOGI’s fiscal 2025 earnings stands at $4.63, indicating a year-over-year growth of 9%.
Conclusion: Investors Should Hold LOGI for Now
While Logitech is navigating fierce competition and economic struggles, its innovative product approach shows promise. Given these factors, investors are advised to hold the stock, currently rated Zacks Rank #3 (Hold). For those interested, you can find the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
