“We now expect a severe reduction in smart-speaker demand, with Sonos products generally at the top end of the pricing,” Goldman analysts, led by Rod Hall, wrote in a report. The coronavirus pandemic obviously plays a role in that.
“We are assuming that demand declines by 50% year-on-year during the shutdown months and that year-on-year growth rates improve in the second half of fiscal 2020 [ending Sept. 28] and first half of fiscal 2021,” the analysts said.
For the fiscal third quarter of 2020, ending June 28, the analysts forecast a 39% decline in Sonos sales, close to the 38% slide they expect in iPhone (AAPL) - Get Report revenue for the quarter. Many iPhone users deploy Sonos speakers.
The analysts slashed their fiscal 2020 revenue estimate by 18% and the 2021 estimate by 24%.
“We continue to believe that Sonos is a strong brand in the smart-speaker category and expect its household penetration to increase over time,” they wrote.
“However, we are concerned that near-term demand impact will be more material than current consensus expectations and that recovery will be slower in 2021.”
The analysts sliced their share-price target to $7.50 from $20 previously. The stock has dropped much further than the overall market this year, “due to product end-of-life issues, litigation and covid-19 related uncertainty,” they said.
Sonos shares have dropped 45% year to date, compared with a 12% slide for the S&P 500.
Sonos recently traded at $8.77, down 5.6%. The S&P 500 was up 1.76%.