How High Can Symbotic Stock Go?

One of the more intriguing applications of artificial intelligence is in warehouse order processing, where robots automate the placement and retrieval of cases and pallets.

Symbotic (NASDAQ: SYM) technology is already in use by major retailers like Walmart, Target, and Albertsons to fill that exact function, and it’s been highly successful so far. The technology’s rapid adoption by big-name companies has driven Symbotic’s revenue up exponentially in just a few short years.

As the top line soared, so too has the share price, rising by over 200% in the past 12 months alone. While that’s impressive, Symbotic shares hit a wall at the end of 2023 and SYM share price is down 24% year-to-date.

Now the looming question is whether Symbiotic will bounce back?

Why Did Symbotic Stock Go Up?

The company started out in 2007 as CasePick Systems but rebranded as Symbotic in 2012. Target was one of its initial customers, flirting with Symbotic technology as early as 2014. In 2016, Target pulled the trigger and put Symbotic robots in one of its largest distribution centers in California.

Implementing the technology saved the retailer a substantial sum of money. The distribution center wasn’t able to keep up with demand, and Target was going to have to build a costly new distribution center. Retrofitting the center for Symbotic robots, however, was a fraction of the cost.

The robots can move at roughly five times the speed of a human and are more precise. The success at the California facility led to wider-scale adoption by Target. It also led to other retailers following suit.

Walmart began testing the technology, and in 2022 Symbotic announced a partnership that would put the robots in all 42 of its distribution centers. While it will take some time to get fully operational in each center, it was a major step for Symbotic.

The company’s success with the biggest retailers in the world is a primary reason SYM has enjoyed such a meteoric rise. Since the company went public through a SPAC transaction in 2022, the stock has gone from around $10 per share to $64.14 at its all-time high in December 2023.

Will Symbotic Stock Keep Rising?

SYM has taken a step back from its highs and currently trades at around $41 per share. Even if there are concerns about the current economic climate, the company’s latest earnings were exceptional. In the fiscal 4th quarter of 2024 (ending September 30, 2023) Symbotic reported total revenue of $391 million.

That was an over 60% improvement from total revenue of $244 million in the same quarter of 2022. It also blew away expectations for the quarter by 27.7%. Symbotic still posted a net loss of $45 million, but that was also a 17.8% improvement over the net loss of $53 million last year.

For the full fiscal year of 2023, the company improved its revenue by 98% on the strength of its partnerships. Symbotic improved its cash and cash equivalents by $35 million year-over-year, to finish out the quarter with $548 million.

That should alleviate any concerns about cash runway, especially when the company improved its bottom line from last year. For the first quarter of fiscal 2024, Symbotic expects between $350 and $370 million in revenue.

How High Can Symbotic Stock Go?

According to 14 analysts, Symbotic stock can go as high as $55.79 per share, a 37.8% gain from present levels.

9 out of 13 analysts who have rated the stock consider it a Buy. Two of those analysts forecast that Symbotic shares will outperform the market, and the most bullish forecast sees the stock going up by 70.9% over the next year to $70 per share.

No Sell ratings exist on SYM at this time but there are four Hold ratings. The lowest forecast projects the share price gaining 7.4% to $44 per share over the next 52 weeks.

Is Symbotic Stock Undervalued?

Wall Street analysts clearly still have faith in Symbotic, and the company’s latest earnings release only fueled that notion. The recent selloff might seem like the perfect time for investors who missed out on the stock’s early gains to buy in.

SYM is currently trading at around 19x sales, which compares favorably to many fast growth technology firms. It’s a high multiple, though, and prices the firm at a premium. Or in other words, any growth mis-step would likely cause the share price to tumble.

When it comes to market positioning, Symbotic appears to be building a substantial moat. There aren’t many companies who can deliver what Symbotic can, and it would be costly for, say, Walmart to refit all of its facilities with a competitor’s technology.

Having landed Walmart, Albertsons and Target as customers, Symbotic has created a high barrier-to-entry for rivals because the friction to switching is enormous.

Symbotic also has revenue potential from its existing customers by providing maintenance for its robots and upgrade options as the technology improves.

Is Symbotic Stock a Buy or Sell?

Symbotic shares are up by around 300% since the company went public. The gains have been on the back of fundamental successes as the disruptive technology has been adopted by some of the biggest names in retail, and in turned created an economic moat that will be hard to breach anytime soon.

Revenues have soared but so too has earnings before interest and taxes almost doubled in the past year. It’s possible Wall Street is concerned now that the low gross margin is hurting the company’s ability to scale and stay profitable simultaneously.

Nonetheless, if Symbotic continues its revenue growth trajectory, it’s hard to see the stock staying down for long as investors will likely give management the benefit of the doubt in figuring out how to keep costs in check down the road.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.