Last Update 09 Feb 26

Fair value Increased 8.54%

SONO: Higher Earnings Power And Buybacks Will Offset Weaker Volumes By 2026

Analysts have raised their price target on Sonos from $17.85 to $19.38, reflecting updated assumptions on revenue growth, margins, and future P/E expectations following recent research commentary.

Analyst Commentary

Bullish and bearish analysts are looking at very different factors as they update their views on Sonos, even as price targets move higher on updated assumptions for revenue, margins, and future P/E levels.

Bullish Takeaways

Bullish analysts see room for the higher price target to be supported if Sonos can execute on its revenue assumptions, especially if product demand and mix support the margin framework that sits behind the new target.
They are comfortable using a richer implied P/E, suggesting they view Sonos as having earnings power that justifies paying more for each dollar of projected profit.
The updated target range signals confidence that the current research commentary has tightened the link between Sonos's execution plan and its valuation, rather than relying only on broad market moves.
Bullish analysts appear to view recent research input as reducing some uncertainty around Sonos's earnings profile, which can support a more constructive stance on the shares at current levels.

Bearish Takeaways

Bearish analysts are likely to question whether the margin assumptions embedded in the higher target are achievable, especially if cost pressures or slower product cycles affect profitability.
Some may see the higher P/E expectations as leaving less room for error, as any shortfall in earnings versus the current research framework could pressure the valuation.
Cautious views may focus on the risk that revenue growth assumptions prove optimistic, which would weaken the case for the new price target if volumes or pricing do not line up with forecasts.
Bearish analysts may also flag that the new target relies heavily on forward expectations rather than recent financial results, which can make the story more sensitive to changes in sentiment or new data points.

What's in the News

Sonos reports that from June 29, 2025 to September 27, 2025 it repurchased 1,522,016 shares, representing 1.26% of shares, for US$20.37 million under the buyback announced on February 24, 2025 (Key Developments).
From September 28, 2025 to December 27, 2025 Sonos repurchased a further 1,488,226 shares, representing 1.24% of shares, for US$24.99 million, bringing total repurchases under the same program to 3,010,242 shares, or 2.5%, for US$45.36 million (Key Developments).
Sonos announced Sonos Amp Multi, a multi channel streaming amplifier aimed at professional integrators, with eight amplified outputs at 125 W each, support for up to four configurable zones, and tools such as ProTune and Optimize Sonos Speakers for more granular system tuning (Key Developments).
The Amp Multi is designed for rack based residential installations, with a 1.5U chassis, a dedicated 2U rack mount, recessed connectors, and an installation process that uses eight screws to help keep setups more predictable (Key Developments).

Valuation Changes

Fair Value: updated from US$17.85 to US$19.38, a modest uplift in the central estimate of Sonos shares.
Discount Rate: adjusted slightly from 8.47% to 8.50%, a small change in the rate used to evaluate future cash flows.
Revenue Growth: revised from 5.82% to 6.62%, indicating a higher assumed growth rate in future sales.
Net Profit Margin: moved from 7.43% to 7.00%, reflecting a slightly lower profitability assumption on future earnings.
Future P/E: raised from 22.04x to 25.56x, indicating a higher multiple being applied to projected earnings.

Enhanced software integration, AI capabilities, and expansion into new product categories strengthen brand loyalty, drive repeat purchases, and support sustained growth and margins.
Cost restructuring and targeted international market expansion improve profitability and diversify revenue, reducing exposure to industry cycles and market volatility.
Tariff-driven cost pressures, delayed hardware releases, and constrained investment in innovation heighten risks of demand erosion, margin compression, and long-term market share loss.

Catalysts

About Sonos

Designs, develops, manufactures, and sells audio products and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.What are the underlying business or industry changes driving this perspective?

Sonos's ongoing platform evolution-where new hardware products compound in value via frequent software enhancements, particularly with integration of AI capabilities-positions the brand for higher household penetration and stickier, more valuable customer relationships, supporting long-term revenue growth and increased gross margins.
Rising global streaming content consumption and the normalization of connected devices in homes create a powerful demand environment for Sonos's multi-room, high-fidelity audio ecosystem; this trend, combined with Sonos's category leadership and growing install base, should drive higher attach rates and repurchase cycles, directly benefiting topline growth.
Reinvestment in international expansion, especially into underpenetrated growth markets, leverages rising global disposable incomes and a widening customer base seeking premium home experiences, which can lift average selling prices and broaden Sonos's revenue streams.
Sonos's structural cost base transformation-driven by reorganization and substantial operating expense reductions-is creating a pathway for sustainable margin expansion and stronger earnings even during weak industry cycles, with full realization of these savings expected in FY26.
Ongoing diversification into new product categories (such as headphones and enhanced home theater), coupled with growing focus on software-enabled functionality and future recurring services, is expected to reduce revenue volatility and cyclicality, supporting both topline growth and higher net margins over the medium to long term.

Sonos Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Sonos's revenue will grow by 5.0% annually over the next 3 years.
Analysts are not forecasting that Sonos will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Sonos's profit margin will increase from -5.4% to the average US Consumer Durables industry of 7.4% in 3 years.
If Sonos's profit margin were to converge on the industry average, you could expect earnings to reach $120.2 million (and earnings per share of $1.02) by about September 2028, up from $-76.4 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.9x on those 2028 earnings, up from -22.3x today. This future PE is greater than the current PE for the US Consumer Durables industry at 11.4x.
Analysts expect the number of shares outstanding to decline by 0.73% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.2%, as per the Simply Wall St company report.

Sonos Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The near-term and possibly persistent headwind from increased tariffs (20% for Vietnam, 19% for Malaysia), with Sonos now manufacturing nearly all U.S. inventory in these countries, will force price increases that may erode demand or require Sonos to absorb costs, pressuring both revenue growth and gross margins.
Sonos's strategy is currently reliant on improving existing hardware via software during a "lull in new hardware releases," with the next significant hardware cycle not expected until the second half of 2026, heightening the risk of losing momentum and market share in a rapidly innovating, competitive industry, impacting revenue and long-term earnings potential.
The company is facing a cyclical downturn in the home audio/electronics category, driven by weak housing data and lingering post-COVID demand pull-in; a prolonged or deeper downturn could further pressure core revenue and delay recovery in earnings.
Although cost reductions have boosted recent EBITDA, declines in research and development (down 17% YoY) and sales & marketing spend may constrain long-term innovation and brand visibility, posing risks to sustainable revenue growth and future gross margin expansion.
Sonos's exposure to competitive threats from "commodity experiences" (tech giants and low-cost rivals) and the uncertainty around consumer elasticity to price increases, combined with a still-limited product and geographic diversification, leave the company vulnerable to market share erosion and revenue volatility as consumer behavior shifts.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $13.625 for Sonos based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $17.0, and the most bearish reporting a price target of just $11.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.6 billion, earnings will come to $120.2 million, and it would be trading on a PE ratio of 16.9x, assuming you use a discount rate of 8.2%.
Given the current share price of $14.07, the analyst price target of $13.62 is 3.3% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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