Investment Research report

Zebra Technologies Corp.

NASDAQ:
ZBRA
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Research Overview

INDEX:
S&P 500
Sector:
Technology
Position:
Short
Date:
Aug 8, 2024

After conducting a forensic financial review of Zebra Technologies Corp., a designer and manufacturer of bar code scanners, printers, RFID devices, workflow automation and mobile computing devices, Spruce Point raises concerns about the credibility of management and the Board, accuracy of its financial reporting, and sustainability of its growth and valuation multiple. Based on our investigation, we estimate a 65% - 80% downside risk, or approximately $62.90 - $110.00 per share.

The report highlights several key concerns with the Company, including:

  • We believe that Zebra is downplaying its competitive pressures across all its core business segments and services and may be embellishing its market leadership claims
  • We highlight how Zebra is not adequately addressing a variety of trends and factors working against the Company, including evidence of a decline in R&D expenses and engineering headcount
  • Our opinion that Zebra’s $2.1 billion leveraged acquisition spree and venture investments should be characterized as failures
  • Our questions of multiple accounting and financial reporting choices made by Zebra, given that it describes its Chief Accounting Officer as being “comfortable operating in gray  areas”
  • Our sum-of-parts illustrative valuation of Zebra’s business suggests that Zebra’s share price could have 65% to 80% long-term potential downside risk
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