Sonos (SONO) Stock Forecast & Price Target

Sonos is viewed favorably because its revamped management team has restored the customer experience, reduced expenses, and refocused the business on ecosystem value rather than products for products’ sake. The company is also showing tangible operating momentum, with March quarter revenue up 8% year over year to $281.5 million, Americas revenue at 64% of total, and high-margin installer-channel revenue representing 22% of sales. With international under-penetration, new product launches, and valuation around 8.8x to 9.5x EV/CY26-27 EBITDA despite recurring beats and conservative guidance, the stock appears to offer upside from both growth and margin expansion.

Sonos is facing meaningful margin pressure as rising DRAM prices weigh on profitability, creating a 200 bps gross margin headwind that offsets some operational improvement. Although first half gross margin dollars rose 7.9% and revenue increased 6.0%, the March quarter still showed GAAP gross margin slipping to 44.3% from 43.7% and Non-GAAP gross margin declining to 46.0% from 47.1%. Even with non-GAAP operating expenses up just 1% year over year and Adj EBITDA margin improving to 0.6% from (0.3%), the company’s thin earnings cushion leaves limited room for sustained execution missteps or cost inflation.