Symbotic stock analysis: is it too late to buy the soaring SYM?

Symbotic stock price staged a strong comeback on Monday after the warehouse technology company published strong financial results. SYM shares jumped by over 26%, reaching a high of $38.60, its highest level since July this year. It has soared by 124% from its lowest level this year, bringing its valuation to almost $20 billion.

Symbotic stock soars after earnings

Symbotic is a leading company that provides warehouse technology to companies like Walmart, Target, Albertsons, Giant Tiger, and C&S Wholesale. Walmart is a big shareholder in the company. 

Symbotic solutions automate warehouses, reduce the number of workers in them, save money, and boost efficiency. Their platform is powered by eight key technologies, such as artificial intelligence, randomizing, autonomous movements, and atomizing.

Symbotic and other similar warehousing companies have done well in the past few years as demand for e-commerce rose. Today, while companies like Target and Walmart do a lot of their business in stores, they have become big names in the e-commerce industry. For example, Walmart’s e-commerce revenue jumped to over $82 billion in 2023.

Symbotic stock price jumped after the company published encouraging financials on Monday. Its fourth-quarter revenue rose to $576 million, up from $391 million in the same period in 2023. 

Its full-year revenue jumped to $1.8 billion from the $1.17 billion it made in the last financial year. Most of this revenue came from its systems business followed by operation services and software maintenance. 

Symbotic also turned a profit in the last quarter. Its net income jumped to over $28 million, a big improvement from the $45 million loss it made a year earlier. Its annual loss improved to $50.6 million from $207 million a year earlier. 

Symbotic believes that its business will continue doing well because of its strong backlog. Analysts expect that its revenue will rise by 34% in the current quarter to $493.6 million.

The average revenue estimate for the new financial year is $2.34 billion, a 28% increase from what it reported on Monday. This revenue will explode to $3.2 billion in the next financial year, helped by strong demand.

Symbotic’s results will likely be better than estimates since the company has a long track record of outperforming expectations. 

Read more: Symbotic stock is heavily shorted: is it a good contrarian buy?

Analysts are upbeat on the SYM stock

Wall Street analysts are upbeat about the SYM stock price. The average stock estimate is $39.38, much higher than the current $30. 

Some of the most optimistic analysts are from Cantor Fitzgerald, Baird, and Deutsche Bank, who see the stock rising. 

However, the biggest concern among some analysts is Symbotic’s valuation, which is quite substantial. The company trades at a forward price-to-sales ratio of over 7, which is significantly higher than most companies.

The other key concern is whether there is more room for growth since most retailers have put in place their warehouses. Also, the company operates in a low-margin business. It hasa gross margins of 17.25%, much lower than the industrial margin of 32.

Symbotic share price analysis

SYM chart by TradingView

The daily chart shows that the SYM share price has made a strong rebound after publishing its financial results. This rebound happened after the stock formed an ascending channel shown in black. It retested the lower side of the channel on Monday.

Symbotic shares have moved above the upper side of the ascending channel and moved above the 50% Fibonacci Retracement level. Also, the Relative Strength Index (RSI) and the MACD indicators have pointed upwards.

Therefore, the stock will likely continue rising as bulls target the key resistance at $50, its highest swing on March 26, which is 63% above Monday’s close. The stop-loss of this trade is at $30. 

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