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Citi analyst Andrew Kaplowitz initiated coverage of Symbotic Inc (NASDAQ:SYM) with Buy/High-Risk rating and a $15 price target Friday.
The analyst believes that due to favorable trends across the warehouse automation end market and the company’s positioning as an end-to-end warehouse automation player, it is well-positioned to generate hyper-growth over the next several years.
Kaplowitz acknowledged “modest risks” such as customer concentration and the discretionary nature of automation spend. “A relatively significant portion of SYM’s sales going to Walmart (NYSE:WMT) creates customer concentration risk, which in our view could even deter new/potential customers given concerns relative to SYM prioritizing its Walmart relationship.”
However, he said Walmart’s “commitment to deploy SYM systems in its 42 regional centers and SYM’s existing backlog of $11.4bn should, in our view support near-term resiliency (in a potential economic slowdown) as well as provide strong multi-year visibility to sales growth.”
“As the company continues to scale/burn backlog, we do expect margins to gradually improve, further supporting earnings momentum,” wrote the analyst.
Symbotic shares are up more than 7% Friday.
