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Sonos, Inc. (NASDAQ: SONO) is a company which is engaged in providing home sound systems. Its product profile includes speaker sets and other accessories like boost, mounts, stands, cables and networking. Geographically, the company operates in the Americas, Europe, the Middle East and Africa, and the Asia Pacific. SONO generates a majority of its revenue from the Americas region.
Key Highlights
Source: Company Filing
Financial overview of FY 2021 in ‘000 of USD
Source: Company Filing
Risks associated with investment
The company is dependent on a limited number of contract manufacturers to manufacture its products, furthermore, to remain competitive and stimulate consumer demand, it must successfully manage frequent new product introductions and transitions. Other key risks are high competition, forex volatility and supply chain issues.
Valuation Methodology (Illustrative) Price to Cash Flow Based
Stock recommendation
The company has recently released several products in a variety of audio categories, and it plans to introduce new products that appeal to a wide range of consumers, as well as bring the differentiated listening platform and experience to all of the places and spaces where its customers listen to the wide range of audio content available. Furthermore, the company's products are sold in over 50 countries, with revenue from outside the United States accounting for 48.1% of total revenue in fiscal 2021. We believe that the company's worldwide expansion will be determined by its capacity to generate sales from a global population of consumers, for which it will build foreign distribution channels and diversify its partner ecosystem to appeal to a wider audience. Therefore, based on the above rationales and valuation, we recommend a "Buy" rating on the stock at the closing price of USD 29.99 as of December 30, 2021.
One-Year Price Chart (as on December 30, 2021). Source: REFINITIV, Analysis by Kalkine Group
*The reference data in this report has been partly sourced from REFINITIV.