Bernstein Keeps Hold Rating on Snap with $10 Price Target

Bernstein analyst Mark Shmulik maintains a Hold rating on Snap with a price target of $10.00. The company reported Q1 revenue of $1.36 bln and a GAAP net loss of $139.59 mln. Insider sentiment is negative, with 106 insiders selling shares. The analyst consensus is a Hold with an average price target of $9.94, implying a 0.61% upside from current levels.

Resideo Technologies (NYSE: REZI), a global manufacturer and distributor of home comfort, security, and automation products, reported robust financial results for the first quarter of fiscal year 2025. The company's strong performance was driven by the Snap One acquisition and increased demand for new products such as HVAC thermostats and alarms.

Resideo's total revenue for Q1 2025 was $1.77 billion, up approximately 19% year-over-year, surpassing the expected $1.72 billion [1]. This growth was primarily attributed to the Snap One acquisition and higher demand for new products. Adjusted EBITDA rose 23% YoY to $168 million, with gross margins improving to 41.4% in the Products segment and 21.6% in ADI, reflecting significant margin expansions in both segments [1].

The company's adjusted EPS stood at $0.63, more than doubling the consensus forecast of $0.28, representing a 125% earnings surprise [1]. Despite cash usage of $65 million in the quarter, Resideo maintained a solid liquidity position, backed by record free cash flow generation of $444 million in FY2024 [1].

In the Products & Solutions segment, Q1 revenue was $649M (+5% YoY, +6% organic), with a gross margin of 41.4% (up 1.9%). Volume grew on new Honeywell Home FocusPRO thermostats and BRK/First Alert alarms. Operating profit rose to $136M (21.0% of sales vs 18.1% year-ago) [1]. Notably, Resideo launched a connected First Alert smart smoke/CO alarm (compatible with Google Home) during Q1 [1].

In the ADI Global Distribution segment, Q1 revenue was $1,121 mn (+29% YoY, +4% organic). The Snap One acquisition contributed $227 mn of this, while the core ADI business grew modestly on higher volume. ADI's gross margin was 21.6% (up 360 bp), and Adjusted EBITDA $72 mn (6.4% margin) [1].

Management reports that the Snap One integration is ahead of schedule, with synergies ramping. Overall, both segments saw double-digit EBITDA growth and healthy margin improvement [1].

Looking ahead, the demand environment for REZI is expected to be steady in 2025. Management has reaffirmed its guidance for 2025 with continued mid-single-digit organic growth and the Snap One's contribution. The company plans further phased price increases to offset any tariffs or cost inflation [1].

Institutional investor activity in the first quarter of 2025 signals growing confidence in Resideo Technologies' long-term prospects. Notably, renowned investor Ken Fisher increased his stake by 15%, reflecting his conviction in Resideo's growth trajectory and operational execution [1].

Resideo's valuation is moderate by many measures. On a forward P/E basis (earnings in 2025), REZI trades around 1012x, exceeding its 5-year historical average of 8x. On an EV/EBITDA basis, Resideo's current multiple is only ~6x, well below its 5-year average (~9.8x) [1].

References:
[1] https://finance.yahoo.com/news/resideo-technologies-hidden-gem-strong-144418343.html