ZBRA: Margin Pressures From Tariffs Will Ease After 2025 For Expanding Profitability

Analysts have slightly adjusted their price targets for Zebra Technologies, with the average target moving modestly lower. Concerns about decelerating organic growth and cautious Q4 guidance have offset more favorable long-term expectations.

Analyst Commentary

Zebra Technologies has seen a range of responses from market analysts following its recent quarterly results and updated guidance. These perspectives reflect differing views on both near-term challenges and longer-term prospects for the company.

• Bullish analysts have noted the company’s strategic handling of tariff headwinds, suggesting operational execution is stronger than the market previously anticipated.
• There is optimism about recent acquisitions, with commentary indicating that new assets are viewed as complementary additions acquired at attractive multiples and likely to enhance the company’s growth profile over time.
• Rising price targets from select analysts suggest confidence in Zebra Technologies' ability to navigate current industry pressures, especially as certain end markets such as data centers show accelerating demand.
• Some believe that the firm has maintained effective pricing power, enabling it to partially offset external margin pressures and continue delivering modest earnings beats in a challenging environment.

• Bearish analysts point to decelerating organic growth as a key concern, highlighting that growth is expected to remain flat in the near term after several quarters of deceleration.
• Recent cautious guidance for the fourth quarter has prompted skepticism about the company’s ability to regain momentum in the short run, leading to some price target reductions.
• There is concern that ongoing margin pressure, particularly from tariffs, may persist into 2025, potentially weighing on profit expectations despite longer-term mitigation plans.
• Investor sentiment appears sensitive to management’s subdued tone in earnings forecasts, leading to a sell-off as expectations for a swift recovery are tempered.

What's in the News

• Zebra Technologies unveiled the findings of its 18th Annual Global Shopper Study, highlighting the increasing importance of Gen AI, automation solutions, and real-time inventory synchronization to address persistent inventory challenges and improve both in-store and online shopper satisfaction. (Key Developments)
• The Board of Directors adopted amended and restated by-laws, instituting a majority vote standard in uncontested director elections. This reflects a notable change in corporate governance. (Key Developments)
• The company provided Q4 2025 guidance, expecting sales growth between 8% and 11% compared to the prior year. This outlook is driven in part by recent acquisitions and favorable foreign currency impacts. (Key Developments)
• Zebra completed a share repurchase tranche, buying back 197,322 shares for $59.47 million. This brings total buybacks since May 2022 to 1.59 million shares. (Key Developments)
• Zebra announced a strategic partnership with Salesforce to launch Retail Cloud POS on Android. This initiative aims to enhance store operations and customer engagement through improved, real-time data and frontline productivity tools. (Key Developments)

Valuation Changes

• Discount Rate has increased modestly from 8.69% to 8.92%. This reflects a slightly higher required return by investors.
• Revenue Growth projection remains stable at approximately 6.89% year over year, showing no material change.
• Net Profit Margin is unchanged at 13.43%, indicating expectations for profitability are consistent with the previous outlook.
• Future Price-to-Earnings (P/E) ratio has risen slightly from 25.11x to 25.80x. This signals a minor uptick in anticipated market valuation for forward earnings.
• Consensus Fair Value is unchanged at $358.47, suggesting overall valuation assessments are steady despite these incremental adjustments.