BWS Financial Raises Arlo Technologies Price Target to $26, Indicates Favorable Outlook

Analyst BWS Financial has raised its price target for Arlo Technologies (ARLO) to $26.00, an 8.33% increase, and maintained its "Buy" rating. This follows a previous "Outperform" rating from Raymond James with a price target of $22.00. Arlo Technologies offers security and video monitoring solutions for homes and businesses, with a majority of revenue generated from the US. The average analyst price target is $22.67, indicating an upside of 34.12% from the current price.

Arlo Technologies (ARLO) has seen its price target increased by BWS Financial, which has raised its target from $24.00 to $26.00, an 8.33% increase. This new target follows a previous "Outperform" rating from Raymond James with a price target of $22.00. The company offers a range of security and video monitoring solutions for both residential and commercial properties, with a significant portion of its revenue generated from the US market.

The average analyst price target for ARLO is $22.67, indicating an upside of 34.12% from the current price. This positive outlook reflects the growing demand for smart home security solutions and the company's strategic partnerships, such as its recent alliance with ADT, which is expected to drive material revenue growth starting in 2026.

Arlo Technologies has demonstrated impressive margin progression despite a series of new product releases. In its Q2 2025 earnings report, the company reported a significant increase in its subscription and services revenue, which now accounts for 60% of total revenue [1]. This shift towards a services-first model has been a key driver of the company's profitability. Arlo achieved a record non-GAAP service gross margin of 85% and expanded its consolidated margins by 800 basis points to 46% [1].

The company's ability to maintain and expand margins despite product releases and challenges like tariffs underscores its operational discipline. This margin expansion is rare in a sector historically plagued by price competition and thin hardware margins. Arlo's focus on high-margin services has driven this impressive growth.

The partnership with ADT is expected to drive material revenue growth starting in 2026. This strategic alliance positions Arlo to capture a significant share of the $100 billion smart home market through recurring revenue scalability [1]. The company's free cash flow of $34 million in the first half of 2025 demonstrates its ability to convert growth into liquidity, further bolstering its financial position.

Despite the competitive nature of the smart home sector, Arlo's 85% service gross margin and strategic partnerships provide a buffer against potential headwinds. The company's 14% EBITDA margins and $335 million ARR target reinforce its transition from a speculative play to a proven scalable business [1].

For long-term investors, Arlo's Q2 results present a rare alignment of financial strength, strategic clarity, and market potential. The company's full-year service revenue guidance of $310 million and ARR target of $335 million by year-end signal confidence in its trajectory [1]. While the stock may still trade at a discount to its intrinsic value, the improving fundamentals and market momentum suggest that patience will be rewarded.

References:
[1] https://www.ainvest.com/news/arlo-technologies-shows-strong-margin-growth-product-releases-2508/