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Symbotic (SYM) stock analysis: priced for perfection ahead of earnings

By: Invezz

Symbotic (NASDAQ: SYM) stock price has done well in the past few months, making it one of the best-performing companies in Wall Street. The shares jumped by more than 480% from its lowest point in 2023, helping push its total market cap to over $28 billion. This makes the little-known company one of the biggest firms in the United States.

Valuation concerns remain ahead of earnings

Symbotic will be one of the top companies to watch on Monday when it publishes its financial results. These results will come at a time when the company has been priced for perfection based on its valuation metrics. 

Let’s start from the top. This is a company with a market cap of over $28 billion and annual revenues of over $1.17 billion. It is also a loss-making company that had a net loss of over $23 million in the trailing twelve months.

Symbotic shares have surged because of the company’s revenue growth, which jumped from $100 million in 2019 to $1.17 billion in the last financial year. The most recent results also demonstrated that Symbotic was in a strong growth path.

The results revealed that the company’s revenue jumped to $392 million in the final quarter of its fiscal year. Its net loss jumped to over $45 million while the adjusted EBITDA came in at over $13 million. In all, the company’s annual revenue rose by 98% YoY in the fiscal year to $1.17 billion.

The challenge is that its valuation seems to be stretched because the management has positioned it as an artificial intelligence (AI) company. This is despite the fact that the company is simply in the robotics industry, where it offers warehouse automation solutions.

The other reason for this is that the company has a substantial backlog. In the last quarter, the management said that it had over $23.3 billion in backlog. This backlog included funds from its GreenBox joint venture with Softbank. The management expects that this JV will provide it with at least $500 million in recurring revenue every year.

Symbotic has a forward PE multiple of 214, which is higher than the sector median of 18.7. It also has a forward EV to EBITDA multiple of 26.36, higher than the sector multiple of 11. This valuation could be justified if the company manages to publish strong results on Monday.

Analysts expect that Symbotic’s revenue will come in at $356 million and its GAAP EPS will be minus $0.05. These results will be better than the $206 million it made in the same quarter a year earlier.

Symbotic stock price forecast

SYM chart by TradingView

The daily chart shows that the SYM share price has done well ahead of its earnings on Monday. It has risen in the past two straight days and crossed the key resistance point at $47.20, its highest point on October 17th. The shares have also flipped the 50-day and 25-day moving averages into support.

Therefore, I suspect that the stock will be a bit volatile after publishing its financial results. I have a bearish bias, which could see it retreat to the key support level at $39.40. The alternative scenario is where it rebounds and reaches its December high of $59.70.

The post Symbotic (SYM) stock analysis: priced for perfection ahead of earnings appeared first on Invezz

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