Sonos stock tumbles 25% after cutting FY outlook; brokers remain positive

Investing.com -- Sonos (NASDAQ:SONO) shares fell 25% Thursday after the company lowered its outlook for the second half of the year.

Although Sonos reported fiscal second-quarter results that topped estimates, the wireless home sound system maker cut its full-year forecast as softening consumer demand weighs on performance.

The company reported adjusted EPS of $0.04 a share on revenue of $304.2 million. Analysts polled by Investing.com anticipated adjusted EPS of $0.01 a share on revenue of $295.9M.

Gross margins decreased 150 basis points year-over-year to 43.3%.

Looking ahead, the company cut its forecast for fiscal 2023 revenue to a range of $1.625B to $1.675B from $1.7B to $1.8B previously. Gross margin for the full year was also lowered to a range of 44.3% to 44.8%, compared to prior outlook range of 45.0% to 46.0%.

The company attributed the cut to "softening consumer demand and channel partner inventory tightening," though added that it was taking "swift action" to reduce operating expenses.

Morgan Stanley analysts cut the price target to $19 per share as "elevated uncertainty remains." On a more positive note, analysts see an attractive valuation.

"We believe Sonos' guide-down illustrates how fluid the demand and inventory environment is today, as historically Sonos has been a good executor," they said.

Jefferies analysts added: "We believe SONO is facing pressure as consumers shift spend from goods to services, and we see SONO as well positioned to benefit as spending returns to the audio category."

Additional reporting by Senad Karaahmetovic

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