Market Pulse

Sonos could be the next hardware acquisition after Fitbit, says analyst

D.A. Davidson analyst Tom Forte said Wednesday that Sonos Inc. sono+0.14% looks well positioned to see its stock appreciate either due to improved investor perception or an acquisition, in the wake of Alphabet Inc.'s googl+1.14% goog+1.17% plans to purchase Fitbit Inc. fit+1.08% "On the bad block of hardware companies, we consider Sonos to be: 1) the best house on the block and 2) the one adjacent to the mansion on the neighboring block, Apple aapl+3.75% " Forte wrote. He sees Sonos as similar to Apple due to his view that both companies make superior products with a focus on design and are able to charge more than competitors. "We see Sonos as a natural acquisition target for Apple, given the similarities in: 1) product quality, 2) design acumen, and 3) premium brands," Forte wrote. "Just as Fitbit fills a void for Google when it comes to healthcare-related data, acquiring Sonos could materially advance Apple's connected home efforts (an area we believe it needs improvement and where its own product, the HomePod, was a disappointment)." Forte rates Sonos shares at buy with a $20 target price. The stock is up 37% so far this year as the S&P 500 spx+1.6% has risen 23%, but it remains below its $15 initial-public-offering price from August 2018.

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