Jefferies lifts Sonos stock on new product optimism

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Jefferies lifts Sonos stock on new product optimism
Credit: © Reuters.

On Wednesday, Sonos Inc . (NASDAQ: SONO ) saw its stock price target increased by Jefferies to $25 from the previous $22, while the firm maintained a Buy rating on the stock. This adjustment comes as the company gears up to introduce a new product category in the second half of 2024.

The decision by Jefferies follows a survey of approximately 650 U.S. consumers conducted in anticipation of Sonos's upcoming launch. The survey revealed that among those familiar with the Sonos brand, a significant 72% expressed a likelihood to purchase a Sonos-branded headphone product. However, the survey also noted a price sensitivity, with only 4% of consumers willing to spend over $400 on headphones.

Jefferies does not anticipate Sonos's initial headphone offering to target the mass market. Despite this, the firm's analysis indicates that even a modest market penetration could be financially beneficial for Sonos.

According to Jefferies, every 1% of headphone cross-sell at a price point of $450 could potentially contribute $69 million in revenue, which would represent a 4.2% growth for the company.

The updated price target reflects the potential revenue growth that Sonos could experience from its new headphone product. As the launch approaches, investors and consumers alike will be watching to see how Sonos's entry into the headphone market will unfold and contribute to its financial performance.

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