Sonos’s Blowout Quarter and Ambitious Outlook Has Wall Street Gushing. The Stock Is Surging.

Even the lower end of the range for the company’s outlook for fiscal 2021 sales of between $1.44 billion and $1.5 billion was ahead of consensus estimates, which sat at $1.38 billion, according to FactSet.

RBC Capital Markets analyst Robert Muller raised his price target on the stock to $24 from $19 in a note late Wednesday. Muller wrote that the results and outlook demonstrated Sonos’s long-term prospects and positive near-term trends in at-home spending.

“We have viewed SONO as one of the handful of companies well positioned to take advantage of spending-at-home trends,” Muller wrote. He noted that the company grew the number of households using its products to 10.9 million from 9.1 million a year ago.

He called repeat purchases impressive, up to 41% of product registrations. He expects longer-term, repeat purchases can continue. He also noted that Sonos has about 4.5% U.S. household penetration. That should provide more room for growth, with repeat purchases following, he wrote.

Stifel analyst Matthew Sheerin raised his price target for the stock to $19 from $16 following the report, but maintained a Hold rating. He called the guidance ambitious, but noted that despite the strong results, the company expects December to be affected by supply constraints. It anticipates supply catching up to demand by the end of the fiscal second quarter.

“Our new estimates reflect that guidance, but we remain Hold-rated on shares as we wait to see how the supply and demand picture plays out,” Sheerin wrote.

Raymond James analyst Adam Tindle pointed to a continuation of strong results, and the outlook that he expects to move forecasts significantly higher. Tindle wrote in a note on Thursday that he believed Sonos was “unjustly cast with a commodity hardware valuation multiple” but moved to a Market Perform rating as the stock neared $17.

“Demand has remained stronger than we foresaw, but we still stand by the stance to let this butterfly go and leave this last run in the stock on the table as risk/reward was not attractive,” Tindle wrote in his note, which was titled “Love is Like a Butterfly,” in a reference to Sonos Radio ambassador Dolly Parton.

Sonos’s shares dipped in October following speculation that Apple (AAPL) planned to introduce a competing product. Apple stopped selling third-party headphones and speakers in its stores. But that product turned out to be the HomePod Mini, which is more akin to smart speakers like Amazon.com’s (AMZN) Alexa and Alphabet’s (GOOGL) Google Home. Sonos shares had been mostly flat in the past three months.

Sonos stock was up 26%, to $21.54 around 10 a.m. Thursday, bringing year-to-date gains to about 38%.

Write to Connor Smith at [email protected]