UBS Group AG: Symbotic (SYM.US) is valued very high and has too concentrated customer base, rating lowered to "sell"

On Tuesday, analysts at UBS Group AG downgraded Symbotic (SYM.US) from "Neutral" to "Sell". They warned that the warehouse automation company's high valuation is difficult to justify, as its growth momentum is slowing down and the company heavily relies on Walmart Inc. (WMT.US) as its main customer base. The bank pointed out that since April, Symbotic's stock price has risen by about 170%, currently trading at around 10 times UBS Group AG's sales expectations for 2027. Analysts at UBS Group AG stated that this pricing level implies investors are expecting a compound annual growth rate close to 50% by 2028, significantly higher than their own forecast of 28%. UBS Group AG stated that the recent third-quarter performance did not change this view, as there are few signs of successful collaborations with customers other than Walmart Inc., and there are unfavorable factors in sales prospects for the next three quarters. The bank also noted that while Symbotic's newly announced storage technology may help improve profitability, it is unlikely to have a significant impact on revenue in the near term. UBS Group AG also emphasized the competitive landscape in the warehouse automation sector, ranking Symbotic relatively low in their "Evidence Lab" survey. Meanwhile, Amazon.com, Inc. (AMZN.US) has made further efforts in online food delivery, expanding same-day delivery services to 3500 locations and lowering the free shipping threshold to $25, bringing potential risks to Symbotic's long-term growth prospects. Symbotic focuses on developing AI-based warehouse automation Siasun Robot & Automation systems and has been a significant beneficiary of the automation trend, but now faces increasing doubts about its ability to expand its customer base and maintain its rapid growth momentum.