Dolby Laboratories (DLB) Stock Forecast & Price Target

Dolby Laboratories Inc. reported total revenues of $307.0 million for the latest fiscal year, reflecting a year-over-year increase of approximately 5.9%, with notable growth in both licensing revenue (up 5.6%) and product/services revenue (up 10%). The company's operating margins improved to 33.2%, up from 31.2% in the previous fiscal year, indicating enhanced profitability amidst a challenging macroeconomic environment. Additionally, the expansion of its technologies, such as Dolby Vision, along with the shift towards SaaS-like models and increased adoption in key markets like China and India, further underscores the potential for sustained revenue growth and market position.

Dolby Laboratories Inc. is facing a challenging outlook, reflected in management's revised growth expectations for its Atmos/Vision/Patents business, which are now set at 15% to 20% over the next 3 to 5 years, a decline from the previous forecast of 15% to 25%. The company anticipates a high-single-digit revenue decline for fiscal 2026, mirroring a similar trend from fiscal 2025, coupled with a decrease in gross margins to 89.7% from 90.1% year-over-year. Additionally, foundational revenues, primarily linked to device volumes, are expected to decrease by low-single digits, indicating ongoing headwinds from post-pandemic purchasing patterns.