On Monday, Deutsche Bank (ETR:DBKGn) increased its stock price target for Symbotic Inc. (NASDAQ:SYM) to $45.00, up from the previous $31.00, while maintaining a Buy rating on the stock. This adjustment comes after Symbotic reported significantly improved financial results, surpassing market expectations.
Symbotic, a company specializing in robotics and automation for supply chain processes, had faced challenges a quarter ago when its adjusted EBITDA fell more than 40% short of consensus forecasts. The shortfall was attributed to lower-than-anticipated Systems gross margins, which stood at 13.6% compared to the expected ~20%.
The company cited factors such as labor cost inflation, construction delays driven by engineering, procurement, and construction (EPC) activities, and unexpected costs associated with innovation-related retrofitting.
However, Symbotic's management committed to addressing these issues and aimed to normalize Systems margins by the fourth quarter. The company succeeded in this endeavor, reporting Systems gross margins of 19.4% and an adjusted EBITDA of $55 million.
These figures not only exceeded the $31 million consensus but also surpassed the company's own guidance of $28-32 million. The revenue was also a strong point, coming in at $577 million against the $469 million market consensus and the company's forecast of $455-475 million.
The substantial outperformance in the financial metrics has led to Symbotic's stock experiencing a surge of over 30% in the past week. Looking ahead, the company's management has provided guidance for the first quarter of 2025, projecting an adjusted EBITDA in the range of $27-31 million. Deutsche Bank's updated model places their estimate at $30.8 million, which aligns with the higher end of the company's guidance.
In other recent news, Symbotic Inc. had a strong fourth quarter, with a 55% year-over-year increase in revenue, reaching $577 million. The company's fiscal year concluded with a total revenue of $1.8 billion. KeyBanc analysts have raised Symbotic's price target to $48 from $40, maintaining an Overweight rating on the stock, following these strong earnings results.
The company's successful quarter was marked by significant developments including the completion of four systems, the deployment of nine, and the initiation of construction on a second GreenBox facility in Georgia. Symbotic also expanded into Mexico in partnership with Walmart (NYSE:WMT) Mexico, a move that is expected to lead to more system deployments in the future.
Despite these positive developments, Symbotic's backlog decreased slightly from $22.8 million to $22.4 million due to macroeconomic changes influencing customer commitment to capital expenditures. However, the partnership with Walmart Mexico is expected to add approximately $400 million to the backlog.
Looking forward, Symbotic anticipates robust growth with a projected 40% year-over-year increase for the first quarter of 2025. The company's acquisition of Veo Robotics is expected to enhance its vision technology and support its planned sales force expansion. These are recent developments that could be of interest to investors.
InvestingPro Insights
Symbotic's recent financial performance and stock surge are reflected in the latest InvestingPro data and tips. The company's market cap stands at $22.71 billion, with a notable revenue growth of 54.84% over the last twelve months. This aligns with the InvestingPro Tip that "Analysts anticipate sales growth in the current year."
The stock's recent performance has been particularly strong, with InvestingPro data showing a 26.91% return over the last week and a 41.45% return over the last month. This corresponds with the InvestingPro Tip highlighting a "Significant return over the last week" and "Strong return over the last month."
Despite these positive indicators, it's worth noting that Symbotic is "Not profitable over the last twelve months" according to InvestingPro Tips. However, the company's improving financial results and analyst expectations suggest a potential turnaround, as indicated by another tip stating "Analysts predict the company will be profitable this year."
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Symbotic, providing a deeper understanding of the company's financial health and market position.
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