Logitech International in Search of New Heights

By Mihir Gupta (UCL), Ameya Joshi (UCL), Sukrith Kumar (UCL), and Filippo Palacino (ETH Zurich)

Stock Name: Logitech International SA

Ticker: SWX: LOGN

Sector: Information and Technology

CMP: CHF 73.30 (as on 18th October 2020

Recommendation: Buy/ Hold

Target: CHF 76.00 - CHF 78.00

Duration: 1 - 2 weeks

Company Overview

Logitech International S.A. is an American Swiss company specialising in computer peripherals and video conferencing services. The firm has headquarters in Lausanne (Switzerland) and Newark (California) with additional offices across Europe, Asia, Oceania, and the Americas.

The firm has acquired numerous subsidiaries since its inception 39 years ago:

  • 3Dconnexion – a hardware and software manufacturer for CAD applications and 3D environments.

  • Mirial S.U.R.L – an Italian company that creates appliances and software for video conferencing.

  • SightSpeed – a videoconferencing company that services an instant messaging app for Windows and macOS operating systems.

  • Slim Devices – a Californian electronics company specialising in digital audio services.

Logitech has been in a perfect position to respond to COVID-19 and the rapid increase in the work from home culture. Despite global economies shrinking due to COVID-19, Logitech has seen 9% of growth in the 2020 Fiscal Year and record high sales of approximately $3bn, making it the fifth consecutive year the company has seen nearly double-digit growth or better.

Product Offerings

Logitech offers a wide variety of computer peripherals and video conferencing services:

Computer Peripherals: The computer peripherals business line can be broken down into mice, keyboards, presentation remotes, conference cameras, webcams, and headsets. With big businesses like Microsoft permanently transitioning some of its workforce toward partly working from home, Logitech is uniquely poised to witness positive gains in this line of business.

Solutions Business: Logitech also has a Solutions business line which focuses on integrating its products with clients. This line of service works with companies that are transitioning toward working from home, involved in Virtual Reality, involved in education, or are healthcare focussed.

Sector and Industry Overview

Once again we have utilised the Top-Down approach in order to conduct the medium-short term industry overview. This entails commencing with the analysis of the general index that the stock is listed on and then swiftly shifting the focus towards analysing the sector, industry as well as the company’s main competitors. Cumulatively, we do this in order to highlight the real outliers as well as to garner a holistic viewpoint of the security.

Before we begin, we would like to highlight that although this report is focused on the Swiss listing of this stock, Logitech International has a global presence with operations in almost all major continents. This territorial diversification of the company is highlighted by the presence of two headquarters: one in Switzerland and the other in California, USA. This is why the stock is listed as tradable security on both the SMI Index in Switzerland as well as on the NASDAQ in the United States.

Graph 1: Rising Trendline and Cup & Handle formation for the NASDAQ Composite (Investing.com as on 18/10/2020)