BofA sees weaker demand ahead for consumer peripherals
Bank of America has downgraded Logitech (NASDAQ:LOGI) to Underperform from Neutral while reducing its price target by 18% to CHF70/$86 from CHF85/$108, citing expectations that demand for the company’s products will weaken significantly over the next 12 to 18 months as higher hardware prices weigh on consumer spending.
Logitech’s U.S.-listed shares were down 5.2% in premarket trading as of 06:23 ET (10:23 GMT).
The bank expects price increases of between 5% and 20% across PCs, tablets, smartphones and gaming devices, driven by rising memory costs for major original equipment manufacturers, to reduce demand for Logitech’s accessory portfolio, including gaming peripherals, mice, webcams and headsets.
“Demand for Logitech products is likely to worsen materially over the course of the next 12-18m given material price hikes across PCs, tablets, smartphones and gaming systems,” analysts led by Didier Scemama said in a note.
Earnings and revenue forecasts reduced
Bank of America lowered its earnings-per-share forecasts for fiscal 2027 through fiscal 2029 by between 6.3% and 10.7%, projecting EPS of $5.33, $5.23 and $5.54, respectively. Those estimates sit between 9.4% and 20.5% below broader market consensus.
The bank also expects revenue to remain under pressure, forecasting fiscal 2027 sales of $4.8 billion, unchanged from the previous year, followed by a 4.1% decline to $4.6 billion in fiscal 2028 before a recovery to $4.8 billion in fiscal 2029. Those projections are between 3.6% and 13.3% below consensus expectations.
Its cautious outlook is supported by forecasts from BofA hardware analyst Wamsi Mohan, who expects global PC shipments to decline 8% during calendar 2026 before returning to modest growth of 2.4% to 2.9% in 2027 and 2028.
Margin pressure remains a key risk
Using its revised CHF70 price target, Bank of America values Logitech at 13 times projected fiscal 2028 EV/EBITDA, down from its previous valuation of 14.5 times. The revised multiple sits near the lower end of the company’s historical 10x to 21x trading range, reflecting expectations of softer revenue and earnings.
The bank’s base-case scenario assumes Logitech can maintain gross margins above 43%, supported by the strength of its product portfolio.
However, analysts cautioned that “consumers could prefer to buy lower priced devices which could push GMs down to high-30%/low-40%.” Such a shift towards lower-priced products could result in a more significant margin squeeze than currently anticipated.
While Bank of America expects operating expenses to decline between 2.8% and 10.5% over fiscal 2027 to fiscal 2029, it also warned there is downside risk to those assumptions.
“While we are confident that management can find additional efficiencies in G&A, we are somewhat concerned that marketing expenses and promotional activities might remain more elevated than we model given likely weaker demand,” the analysts wrote.
“Both cost lines could create additional downside to our estimates in our view,” they added.