After a strong performance of over 50% in the last 12 months, the shares of Swiss-American hardware specialist Logitech plummeted around 10% in afternoon trading yesterday. This was despite the fact that the presented business results were solid and even exceeded expectations. Also positive: After price increases, Logitech management raised the forecast for the full year.

Logitech – it all started with mice Before we get to the current numbers, let me introduce you to the company first: Logitech International SA is a Swiss-American company founded in 1981 by Daniel Borel and Pierluigi Zappacosta. The company is headquartered in Lausanne and Newark, California, and employs more than 8,200 people worldwide.

At the beginning, the company focused mainly on computer mice before becoming a world leader in the computer peripheral industry. Today, Logitech offers a wide range of products, including keyboards, webcams, speakers, headsets, game controllers, and more. Logitech is known for its innovative products and its commitment to quality and customer satisfaction.

All of the company’s products are seen as the last interface between the user and the PC, gaming console, or digital music or entertainment system.

Slight decline in sales in the third quarter In the Christmas quarter (Note: Logitech has a broken fiscal year that ends on March 31), computer accessory manufacturer Logitech sold slightly less than the previous year, but slightly exceeded expectations. In the end, sales of $1.26 billion were recorded. This was 0.8% below the comparable prior-year quarter, but $10 million above analysts‘ expectations.

The individual product categories developed differently: While sales of gaming accessories decreased by 1%, keyboard and combo sales climbed 4%. Meanwhile, demand for video collaboration fell by 2%. PC webcams (-9%) and headsets (-11%) were also significantly less in demand.

However, the company had its costs under control and was able to improve its profitability. Operating profit improved by 22% to $248 million. Earnings per share even increased by 80% to $1.55 per share. Adjusted for special effects (NON-GAAP), the company recorded an increase of 34% to $1.53 per share. This exceeded analysts‘ estimates (source: Seeking Alpha) by a significant 36 cents.

Management raises forecast Meanwhile, the management is confident and has raised the outlook for the 2023/24 balance sheet year, which was already raised in October. CEO Hanneke Faber now expects sales of $4.2 to $4.25 billion. Previously, „only“ $4.0 to $4.15 billion had been targeted. The adjusted operating profit before interest and taxes (EBIT) was raised from $525 to $575 million to $610 to $660 million.

The new plan corresponds to a sales decline of 6 to 7%. For the adjusted pre-tax result, an increase of 4 to 12% is targeted. This is partly due to the company’s price increases, which were raised again in October.

Analyst opinions vary greatly Meanwhile, analysts are divided. According to the financial website Marketwatch.com, of the 16 analysts who cover the stock, only 5 recommend buying the shares. Another 9 rate the stock as a hold position, while 2 bankers even give a sell recommendation. Based on consensus estimates for the current fiscal year ($3.03 per share), the stock is currently valued at around 29 times expected earnings on the stock market. On average, analysts estimate a fair value of $88.18 per share. This is only slightly above the price paid for the shares in yesterday’s afternoon trading (price at 5:10 pm: $86.44).