Dolby Laboratories (DLB) Stock Forecast & Price Target

Dolby Laboratories reported total revenues of $307.0 million, reflecting a 1% year-over-year increase and aligning closely with estimates, while operating margins improved to 33.2%, up from 31.2% in the previous fiscal year. The company achieved a total revenue growth of 5.9% year-over-year, driven by a 5.6% increase in license revenue and a 10% increase in product and services. Additionally, the adoption of its technologies, particularly within the growing premium large format (PLF) cinema sector and expanding opportunities in the SaaS market, indicates strong prospects for future revenue growth, bolstered by rising demand for Dolby Vision technology in key international markets.

Dolby Laboratories Inc. is facing a negative outlook as management has revised its growth expectations for its Atmos/Vision/Patents business down from 15%-25% to 15%-20% over the next three to five years. The company anticipates a high-single-digit revenue decline for fiscal 2026, mirroring the declines experienced in fiscal 2025, and has adjusted its Q1 estimates downward due to persistent headwinds in device volumes following a pandemic-driven surge in purchases. Additionally, gross margins have seen a slight reduction, from 90.1% to 89.7%, indicating ongoing challenges amid a macroeconomic environment that is adversely impacting foundational revenue tied to device sales.