Symbotic Stock Upgrade: A Speculative Buy Opportunity For Bold Investors

Core Viewpoint - Symbotic Inc (SYM) is considered a high-risk investment, but its recent stock decline has made its valuation more reasonable, prompting an upgrade to a buy for speculative investors [1][27]. Company Overview - Symbotic was founded in 2016 to enhance operational efficiencies in modern warehouses and reduce costs [3]. - The company held its 2024 Investor Day on May 9, 2024, where CEO Rick Cohen discussed the company's growth and future plans [2][3]. Financial Performance - Symbotic's sales grew from $252 million at the end of fiscal 2021 to$ 1.18 billion at the end of fiscal 2023, with expectations of reaching $1.75 billion by the end of fiscal 2024 [6]. - The company reported a revenue growth of 58% year-over-year in the third quarter of FY 2024, but projected a slowdown to 18.6% growth in the fourth quarter [7][12]. - The gross margin fell to 13.70%, a decline of 325 basis points from the previous year, primarily due to increased system costs and elongated construction schedules [10][11]. Operational Challenges - The company faced execution issues and construction delays that impacted the deployment of its warehouse automation systems [7][10]. - CFO Carol Hibbard indicated that the company had stabilized the pace of system deployment starts, with a reacceleration expected in the third quarter [7][12]. Market Position and Valuation - Symbotic has a backlog of$ 22.8 billion, indicating strong demand for its solutions [7]. - The company's price-to-sales (P/S) ratio is currently 1.303, significantly below its three-year median of 1.923, suggesting potential undervaluation [18]. - Analysts forecast significant EPS growth for fiscal years 2025 and 2026, indicating that the market may undervalue the stock's growth potential [19]. Future Outlook - CEO Cohen expressed optimism about the company's growth trajectory, stating that the current year would be the slowest for the next 50 years [6]. - The company plans to add one to two customers annually and expects to deploy more systems, which could significantly increase its operational footprint [5][6].