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Zebra Dips 6% Despite Better-Than-Expected Q4 Results

Zebra Technologies Corp. (ZBRA) has delivered better-than-expected fourth-quarter results. However, ZBRA stock declined 7.8% on Thursday due to subdued guidance provided by the company.

The mobile computing company makes technology used to sense, analyze, and act in real time. It manufactures and sells marking, tracking, and computer printing technologies. 

The company reported adjusted earnings of $4.54 per share against the consensus estimate of $4.40 per share. The figure compares favorably with $4.46 per share in the same quarter last year.

Total revenues generated during the quarter rose 12.2% year-over-year to $1.47 billion, beating the consensus estimate of $1.46 billion. Segment-wise, the revenue of the Enterprise Visibility & Mobility unit climbed 15.2% year-over-year. Further, Asset Intelligence & Tracking segment’s sales were up 4.5% against the same quarter last year.

The CEO of Zebra, Anders Gustafsson, said, “While the supply chain constrains us from fully satisfying customer demand, we enter the year with a strong order backlog and a robust pipeline of business, positioning us well for profitable growth in 2022. The continued opportunities in our vibrant core and expansion markets advance our Enterprise Asset Intelligence vision and enable us to increase our long-term organic sales growth expectations.”

Outlook

Zebra’s guidance for the first quarter of 2022 has been impacted by supply chain challenges. It projects net sales to rise 1-3% year-over-year in the first quarter of 2022. Meanwhile, its adjusted earnings are expected to be between $3.70 and $4 per share. Adjusted EBITDA margin is anticipated to be about 20%.

For 2022, the company expects revenues to grow between 3% and 7%. Also, it anticipates an adjusted EBITDA margin of 23% to 24%.

Analysts’ Recommendation

Following the release, Needham analyst James Ricchiuti reiterated a Buy rating on Zebra and lowered the price target to $580 from $620. The new price target implies 24.3% upside potential from current levels.

Ricchiuti said, “We continue to believe that ZBRA can deliver growth in its core business at least in line with 4-5% market growth forecasts, while generating strong growth in market adjacencies. With backlog strong, healthy bookings and recent pricing actions, we believe there is upside potential to our 2022 estimates.”

Based on 2 Buys and 1 Sell, the stock has a Moderate Buy consensus rating. The average Zebra price target of $566.67 implies 21.4% upside potential from current levels. Shares have gained 14.4% from the past year.

News Sentiment

News Sentiment for Zebra is Very Positive based on 12 articles over the past seven days. All the articles have Bullish sentiment, compared to a sector average of 65%, and none have Bearish Sentiment, compared to a sector average of 35%.

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