Raspberry Pi Holdings PLC's (LSE:RPI) maiden full-year results on Wednesday got a positive reaction from City analysts, including an upgrade from Jefferies.
The US broker said the inventory correction that had been a headwind for Raspberry Pi's 2024 revenues and earnings "has now largely ended".
It noted that, as a result of this, orders are now showing a gradual improvement, with additional contribution from the new products launched last year, including the CM5, the RP2350 MCU and AI accessories.
Raspberry Pi launched 22 new products in 2024, with as many in the second half as it has launched in whole years before, including the 2GB Raspberry Pi 5, the Compute Module 5, the RP2350 second generation microcontroller (MCU), the Pico 2 and accessories including the AI Kit and AI camera.
Many of these made a material contribution in 2024 and a higher contribution is expected this year.
"We expect the contribution from these products and direct-to-OEM customers to further accelerate into 2026," said Jefferies, upgrading the stock to 'hold' from 'hold' but cutting our target price to 650p from 770p.
The shares were up over 8% to 511p on Wednesday morning.
Jefferies pointed out that new accessories contributed an increased $8.5 million gross profit, up 89%, while microcontroller units (MCUs) jumped 81% to result in a gross profit for MCUs, publishing and others versus a loss in 2023.
"Raspberry Pi seems to be aiming for a further growth of over 40% in its MCU sales this year, which we expect to be comfortably achieved," said Jefferies, also highlighting that semiconductor sales are forecast to become a bigger proportion of the company's sales in coming years and carry a higher gross margin than the corporate average.
Management said that the IPO has made it significantly easier to gain C-suite access at larger industrial companies, supporting the direct-to-OEM strategy to generate high-volume industrial IoT contracts.
"Given the longer cycle time involved in the sales, development and ramp of these products, these new direct-to-OEM contracts are expected to make a material contribution to 2026 and beyond revenue, but with limited contribution this year," the broker added.