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Sonos (SONO) Sets Long-Term Targets, Unveils Smart Speaker

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Recently, in a virtual investor event, Sonos, Inc. (SONO - Free Report) debriefed investors about its progress on various operational metrics and unveiled the long-term financial targets for 2024. The company also launched Sonos Roam, an ultra-portable smart speaker with immersive audio experience, as it aims to gain a bigger pie in the global audio market.

With a customer-focused business model, the company is increasingly gaining traction as consumers tend to purchase additional products over time. These repeat customers form the crux of its business as the company reportedly reached 11 million homes at the end of fiscal 2020, accounting for about 9% of 116 million affluent homes in its existing markets. Sonos aims to expand this customer base and reach a wider audience in order to tap the $89 billion worth of global audio market.

This Santa Barbara, CA-based consumer electronics firm is continuously working with modernized innovative sound systems based on AI to upgrade products with smart functions. Sonos Roam — the latest entrant in its catalog of high-end sound systems — is built to deliver impeccable audio experience and stream music on the move through Bluetooth or over Wi-Fi while at home. It has 10 hours of battery life for continuous playback on a single charge and up to 10 days of longevity when not in use. The product is likely to be widely available in retail markets for £159 starting Apr 20.

Despite challenging macroeconomic conditions, Sonos expects a healthy momentum in its business with 2024 revenues likely to witness a CAGR of 13% from the midpoint of fiscal 2021 guidance to $2.25 billion. This marks a significant improvement from earlier CAGR projections of around 10% on the back of innovative product launches. Gross margin is likely to be in the range of 45% to 47% compared with prior target of 42-44%, while adjusted EBITDA margin is expected within 15-18%, up from earlier estimates of 13-15%, driven by wider product acceptance and diligent execution of operational plans.

With evolving consumer preferences and a rich database of satisfied repeat customers, Sonos is likely to benefit from a solid portfolio of premium audio products. Earnings estimates for the current and next fiscal have moved up 100% and 63.2%, respectively, over the past year. The stock has gained a stellar 289.4% in the past year compared with the industry’s rise of 69.8%. With a VGM Score of A, the stock delivered a positive earnings surprise of 157.2%, on average, in the trailing four quarters.


 

We remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the broader industry are Plantronics, Inc. , sporting a Zacks Rank #1, (Strong Buy) and Corning Incorporated (GLW - Free Report) and Viavi Solutions Inc. (VIAV - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Plantronics delivered a trailing four-quarter earnings surprise of 560.4%, on average.

Corning has a long-term earnings growth expectation of 2%. It delivered a positive earnings surprise of 41.6%, on average, in the trailing four quarters.

Viavi delivered a trailing four-quarter earnings surprise of 20.2%, on average.

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