The high-flying warehouse automation inventory was reduce to a promote at a Wall Avenue agency.
Shares of Symbotic (SYM -10.93%) fell on Tuesday, down 10.9% in at the moment’s buying and selling.
Symbotic’s inventory has been on an absolute tear this 12 months, up over 130% for 2025, even after at the moment’s downturn. However with a sky-high valuation and far of Symbotic’s enterprise coming from only one buyer, one Wall Avenue analyst determined to downgrade shares on these twin dangers.
UBS provides the thumb’s all the way down to Symbotic
On Tuesday, Wall Avenue financial institution UBS reduce its score on Symbotic to promote from its prior impartial stance, even because the agency raised its value goal from $27 to $35. For reference, Symbotic inventory trades simply over $54 as of this writing.
UBS analyst Damian Karas cited a number of dangers to the corporate’s outlook. First, whereas income has grown loads just lately, the corporate’s backlog hasn’t actually elevated since 2023. Furthermore, Symbotic’s one large buyer, Walmart, accounts for a lot of that backlog and is funding Symbotic’s analysis and improvement. As well as, Karas factors to competitors within the warehouse automation house, noting that Symbotic will not be the one firm on the market, with different decision-makers cautious of committing to Symbotic’s expertise, per a latest survey.
In gentle of all these components, Karas sees dangers to the sturdy development assumptions embedded within the firm’s sky-high valuation, noting, “We see the latest run-up and rerating as not justifiable.”
Picture supply: Getty Photos.
Watch out for nosebleed ranges right here
Warehouse automation is little doubt the way forward for e-commerce and brick-and-mortar retail distribution facilities. Nonetheless, Symbotic trades at a really wholesome 14.6 occasions gross sales, whereas the corporate continues to lose cash. And whereas investing in money-losing development corporations can work, it is likely to be laborious to justify for a low-margin {hardware} firm. Final quarter, Symbotic’s gross margin was simply 18%. Thus, it will take lots of income development for the corporate to generate the significant future earnings wanted to justify at the moment’s $32 billion market cap.
Billy Duberstein and/or his shoppers don’t have any place in any of the shares talked about. The Motley Idiot has positions in and recommends Symbotic and Walmart. The Motley Idiot has a disclosure coverage.
