Morgan Stanley upgrades Zebra Tech on improved demand outlook

December 02, 2024 09:49 AM PST | By Investing

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Morgan Stanley upgrades Zebra Tech on improved demand outlook

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Investing.com -- Morgan Stanley has upgraded Zebra Technologies Corporation (NASDAQ:ZBRA) to “equal weight” from “underweight” on healthier consumer data, improving retail capital expenditures, and de-risked 2025 estimates.

Brokerage said the risk-reward scenario for the stock is looked more balanced, despite maintaining concerns over its valuation being slightly ahead of recovery.

Morgan Stanley (NYSE:MS) highlighted that Zebra's demand environment is expected to improve over the next 12 months, driven by stronger trends in retail, e-commerce, and transportation&logistics end-markets, along with a normalization in large customer activity.

MS also pointed to an upward revision of 2025 retail and distribution capex estimates, with a notable 360 basis points increase, which further supported its positive outlook.

The upgrade follows improving trends in e-commerce and consumer data, with retail capex expectations for 2025 rising by approximately 9.8% year-on-year, an improvement from the previous forecast of 6.2%.

Morgan Stanley raised its price target on Zebra to $400, up from $305, based on a revised earnings outlook and improved demand dynamics. It expects company to move past the risks associated with the e-commerce overbuild, a key concern that previously led Morgan Stanley to adopt an underweight rating.

“We believe the name lacks a negative catalyst over NTM as demand environment is improving and large customer activity continues to normalize, leading to our view for minimal downside to FY25 estimates,” analyst wrote

This article first appeared in Investing.com

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