Shares of the robotics company Symbotic Inc have more than tripled since the beginning of 2023. That growth has been great for shareholders, but analysts at UBS believe the company’s upside is increasingly limited going forward.
The firm downgraded Symbotic to Neutral from Buy and lowered its price target to $34 from $40.
“While we remain supportive on SYM growth prospects and warehouse automation tech leadership, we downgrade shares to Neutral as we see more balanced risk/reward following the +230% YTD stock appreciation,” analysts wrote.
“Albeit the company's $12 billion backlog derisks medium-term growth and brings tech validation, it also creates a very high revenue base that could become difficult to grow off in the out-years.”
Shares of the company climbed nearly 2% Thursday afternoon to $42.64.
UBS projects Symbotic to continue to add new customers, but now the market is already pricing that in, the analysts said.
In turn, the firm expects Symbotic’s backlog to be realized by the end of fiscal 2028. That’s going to require large-scale multi-site customers.
“The challenge for SYM is the existing contracts bring an aftermarket recurring software/service revenue stream of just (around) $300 million assuming a mostly LSD (low-single-digit) attachment rate,” analysts wrote. “Thus, SYM needs to find (more than) $2 billion of incremental annual opportunity just to hold (fiscal years 2027 and 2028) topline.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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