top of page
  • Writer's pictureAbacus Research

Zebra: In an upcycle + structural growth

Zebra (ZBRA) is an industrial solutions company, with limited visibility, and subject to fluctuations in the capex cycle, hence not for everyone.

  • Quality is solid, and we think misrepresented in the low valuation put on the shares. Most products focus on niche applications with an oligopolistic market structure selling to enterprise customers where TCO is going to be a dominant force, as is the repair / service component.

  • To realise our upside, we would need the market to accept that Zebra has changed, and that growth drivers are strong and secular. We think this happens through continued beat / raise quarters.

The secular growth scenario:

  • logistics/transportation, e-commerce and healthcare (~50% of revenues) have strong tailwinds and increased used cases for next 5 + years.

  • Combine this tailwind with Zebra market share gains due to Android and an energised reseller channel and it is easy to get to 7%-8% structural growth.

  • Zebra was the first company to launch Android products for the enterprise market and that certainly benefited it, gaining ~60% market share of Android devices vs approx. 40% share of all mobile compute devices.

  • Just surfing the Android adoption wave for the next couple of years adds 5% growth to 55% of Zebra’s revenues relative to ~3% market growth. i.e. a 2.5% tailwind.

Potential Upside: $228 (+31%): Structural changes and share gains mean that growth remains 7-8% for 3-4 years, not 3-4%.

Sensible Downside: $147 (-15%): Low growth scenario of 3%, cyclical tailwind ends in 2019.

Recent Posts

See All

Fortive: potential14% IRR

Fortive is a high quality business with an asset light model, high margins, high incremental margins and consistent FCF generation that is reinvested in M&A. Recent guidance for slow organic growth fo

Vertiv (VRT) - Datacentre play on AI theme

Vertiv is a leader in critical infrastructure for datacentres and a clear beneficiary of AI driven growth. AI tailwind for datacentres is only starting. To date, Vertiv has seen little to no impact fr

Palantir (PLTR)

The advent of LLM’s have changed Palantir's relationships with institutions – the commercial market is now open to what Palantir is selling. This is a significant change from one year ago. AIP bootcam


bottom of page