Data management expert Zebra Technologies (ZBRA 1.60%) reported robust fourth-quarter results on Thursday, inspiring several bullish analyst reports. Among them, Baird analyst Richard Eastman raised his price target for Zebra from $292 to $312 per share, based on a compelling analysis.
What this analyst expects from Zebra
Eastman explained his reiterated "outperform" rating on Zebra's stock with an insightful analysis of its most important target market. The retail sector was the first to head into the economic downturn of 2021 and 2022, and the same industry appears headed for a robust recovery.
On the earnings call, management cited "green shoots" in retail clients' service and infrastructure spending, though they still prefer to keep their guidance conservative.
"We feel good about modest increases through the year as demand progresses throughout the year, but we'd like to get a little more confidence by having more orders, more projects, more deployments across our end customers move forward," said CEO Bill Burns.
That's still an optimistic projection. The Baird analyst expects Zebra's financial results to blossom as a result.
That's an astute analysis, Mr. Eastman!
Reaching Baird's $312 target would be a 13% increase from Zebra's current share price. It would also fall just short of the stock's 52-week high, more than 50% below the all-time peak set in December 2021. So, the price target looks realistic from a historical point of view, and Zebra's stock trades at an affordable valuation of 3.1 times sales today.
Eastman's retail-based analysis of Zebra's near-term prospects strikes me as reasonable and downright insightful. I agree with his bullish rating of Zebra's stock, and there's additional value in the company's blossoming portfolio of artificial intelligence (AI) tools. From my perspective, this stock looks like an undervalued innovator.
