In a report released today, Damian Karas from UBS downgraded Symbotic to a Sell, with a price target of $35.00.
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Damian Karas has given his Sell rating due to a combination of factors including Symbotic’s high valuation and lack of significant growth acceleration. Despite the stock’s substantial performance increase of 170% since April, the valuation at 10 times the 2027 sales estimate appears unsustainable without evidence of new business wins beyond its primary customer, Walmart. The recent financial results did not show significant progress in expanding the customer base, and there are anticipated sales challenges over the next few quarters. Additionally, while the new storage technology may improve profitability, it is not expected to drive near-term sales significantly.
Furthermore, the competitive landscape in the warehouse automation sector and potential risks from Amazon’s expansion in online grocery add to the concerns. The downward revision of adjusted EBITDA estimates by 19-26% reflects anticipated headwinds, including a new storage structure. These factors, combined with the need for substantial additional business to justify the current market cap, underpin the Sell rating. The intrinsic value is estimated at $34 per share, indicating a potential overvaluation at the current market price.
According to TipRanks, Karas is a 4-star analyst with an average return of 9.7% and a 63.11% success rate. Karas covers the Industrials sector, focusing on stocks such as A. O. Smith Corporation, Crane NXT, and Flowserve.