SONO – Given management’s excitement about demand and confidence about Arcs and product launches, market expectations are still too bearish, suggesting equity outperformance remains warranted

• Sonos, Inc. (SONO:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 26.6x Uniform P/E. Even at these levels, the market has bearish expectations for the firm. However, given management’s excitement about demand and confidence about the Arcs preorder and product launches, market expectations are still too bearish, suggesting equity outperformance remains warranted
  
  

• Specifically, management generated an excitement marker when saying that they will meet the upcoming demand for H2 2020. In addition, they are confident that they sold significantly more Arcs during preorder compared to the preorder period for Beam two years ago despite a higher price point, and that both their DTC channel strength and successful product launches were able to offset revenue headwinds