Brean Capital Is Bullish On Logitech's 'Next Leg Of This Transformation'

Logitech International SA (USA) LOGI is an “organically transforming company” with a “premium brand cache at an attractive valuation,” Brean Capital’s Ananda Baruah said in a report. He initiated coverage of the company with a Buy rating and a price target of $30.

Analyst Baruah believes Logitech’s valuation is attractive based on:

1. Street estimates seem to be materially low for the next four-to-eight quarters
2. The price target represents 30 percent upside
3. The company could potentially generate double-digit revenue growth and 15-20 percent EPS growth

The Next Leg Of This Transformation

“At the heart of the story lies an opportunistic executive transformation, which at the very least includes the CEO, the CFO, and, more recently, Investor Relations, and we suspect numerous others about which we're unaware,” Baruah commented. He mentioned the following strategy that the company should adopt:

• A “youthful,” yet “seasoned” CEO with product development and get-to-market experience. The analyst suggested Bracken Darrell, formerly of Whirlpool Corporation WHR, Procter & Gamble Co PG and General Electric Company GE.
• A CFO with “outward-looking investment acumen” and “a unique understanding of operations management.” The analyst suggested Vincent Pilette, formerly CFO of Electronics For Imaging, Inc. EFII and HP Inc HPQ.
• The recent addition of Ben Lu in Investor Relations. Lu has a decade of experience in successful long and short investment management, “which we believe now provides LOGI with both the lens and relationships to best position the story and the stock for success.”

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