Why Sonos Stock Zoomed 14% Higher This Week

An estimates-crushing quarter and a clutch of analyst price-target hikes were the rockets that propelled Sonos (NASDAQ: SONO) stock into the heavens this week. Across the five trading days, the next-generation audio equipment maker saw its share price rise by more than 14%, according to data compiled by S&P Global Market Intelligence.

Sonos blew past the bottom-line consensus estimate

For the first quarter of its fiscal 2024, Sonos revealed on Wednesday the company earned revenue of slightly under $613 million. This was a nearly 9% decline on a year-over-year basis; still, it trounced the consensus-analyst estimate of a bit over $589 million.

Non-GAAP (adjusted) net income went in the opposite direction, rising by nearly 3% to land at more than $106 million ($0.84 per share). That was a very convincing beat, as those prognosticators were collectively modeling only $0.42.

In its earnings release, Sonos teased a potential blockbuster new offering. It quoted CEO Patrick Spence as saying that the company was "just months away from announcing our highly anticipated new product in a multi-billion dollar category."

Sonos reiterated its full-year fiscal 2024 guidance, which called for revenue of $1.6 billion to $1.7 billion; the average analyst estimate is slightly below $1.65 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) should come in at $150 million to $180 million. The company did not proffer any net-income guidance.

It's a buy at higher prices, say some analysts

In the wake of the earnings release, several analysts raised their price targets on Sonos stock. Among them was Craig-Hallum's Alex Fuhrman, who cranked his level 25% higher (to $25 per share from $20) while maintaining his buy recommendation. Morgan Stanley's Erik Woodring matched Fuhrman's $5 increase and new $25 per-share target and similarly kept his overweight (read: buy) rating intact.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sonos. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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