Arlo Technologies (ARLO): Evaluating Valuation After 57% Share Price Gain in 2024

Arlo Technologies (ARLO) shares have seen minor movement lately, and investors may be curious about its current valuation. The stock has climbed nearly 57% so far this year, which reflects some renewed investor interest.

See our latest analysis for Arlo Technologies.

Arlo Technologies’ nearly 57% share price return so far this year signals strong positive momentum and increased market confidence, especially compared to its longer-term performance where the 1-year total shareholder return is up just over 50%. Investors seem to be warming up to Arlo’s growth prospects as new developments help shift sentiment and boost the case for further gains.

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With shares up impressively this year and trading below analyst price targets, the question remains: Is Arlo stock undervalued, or have investors already priced in all the potential upside?

Most Popular Narrative: 25.6% Undervalued

With Arlo Technologies closing at $17.25 and the most popular narrative suggesting fair value is $23.20, sentiment strongly favors significant upside. This sets up an intriguing case to examine the core thesis underpinning this view.

"Continual migration of subscribers to higher-priced AI-driven service tiers (Arlo Secure 6) and the corresponding increase in ARPU (now over $15, up 26% y/y) reinforces the long-term shift to recurring, high-margin (85% non-GAAP service margin) subscription revenue, supporting expanding net margins and earnings visibility."

Read the complete narrative.

Want to know what powers this bullish outlook? The fair value hinges on a projected subscription surge, near-elite service margins, and analyst confidence in future profitability. Surprised? Uncover the exact financial leap that justifies such optimism. Read the full narrative to see what could fuel the next big move.

Result: Fair Value of $23.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lower hardware prices and growing dependence on subscriptions could squeeze margins, which casts uncertainty on the optimistic outlook for Arlo Technologies.

Find out about the key risks to this Arlo Technologies narrative.

Build Your Own Arlo Technologies Narrative

Prefer a hands-on approach? Dive into the data yourself and craft your own perspective on Arlo Technologies; all it takes is just a few minutes. Do it your way

A great starting point for your Arlo Technologies research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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