ZBRA

Zebra Technologies ($ZBRA) Sees Director Buying After 40% Plunge..."Was $233 the Bottom?"

11/20/2025 21:33

Zebra Technologies ($ZBRA) has plunged over 40% from its early 2025 highs, but consecutive director-level purchases are sending a crucial signal to investors. As a global leader in automatic identification and data capture solutions, Zebra provides barcode scanners, RFID solutions, and mobile computing devices essential to retail, manufacturing, logistics, and healthcare industries. The $5.26 billion annual revenue company recently expanded its business scope with a $1.3 billion acquisition of Elo Touch Solutions. The most notable move came on November 18, when director Satish Dhanasekaran purchased 1,000 shares at $233.26, near this year's lowest levels. This followed February's consecutive purchases by director Anders Gustafsson, who bought 3,227 shares over two days in a $1 million bet when shares traded at $309-311. The fact that another director stepped in to buy at even lower levels sends a strong signal that management views current prices as attractive. These director purchases contrast sharply with executive selling in late 2024, when multiple officers including the CEO consistently sold shares in the $380-400 range. Considering this pattern of insider selling at highs and buying at lows suggests a potential inflection point in the stock's cycle. The primary catalyst for the stock's decline was tariff concerns raised during the February earnings call, when CEO Bill Burns warned of a $20 million hit to adjusted EBITDA, potentially reaching $60 million without mitigation measures. While shares plummeted following this guidance, actual results have been more resilient. Third-quarter results showed adjusted EPS of $3.88, beating estimates, with fourth-quarter guidance of $4.20-4.40 per share exceeding Wall Street expectations. Zebra's current valuation appears compelling, with a forward P/E of 12.79x down from over 20x previously, and a PEG ratio of 0.81 indicating undervaluation relative to growth prospects. Analysts' average price target of $358 suggests over 50% upside potential from current levels. Given continued growth in retail and logistics automation demand, Zebra's market-leading position and recent acquisition-driven expansion should provide long-term growth catalysts. Financially, the company remains sound with $866 million in annual operating cash flow and a manageable 63% debt-to-equity ratio. Cash holdings of $1.05 billion and a current ratio of 1.61 indicate adequate short-term liquidity. However, quarterly earnings growth declining 26.3% year-over-year reflects near-term challenges. Key scenarios for investors include an optimistic case where tariff impacts prove more limited than feared and supply chain diversification succeeds, creating attractive opportunity from current undervaluation. The base case assumes tariff pressures persist but are gradually overcome through pricing and efficiency measures. The risk scenario involves escalating trade tensions and prolonged customer investment delays. Investors should view director purchases as positive signals while accepting near-term volatility. Upcoming quarterly results will clarify actual tariff impacts and mitigation effectiveness, providing crucial guidance. For long-term investors, current valuations appear to offer significant margin of safety.