TD Cowen reiterates Zebra Technologies stock rating on strong execution By Investing.com

TD Cowen reiterated a Buy on Zebra Technologies and kept its $400 price target, implying meaningful upside from the current $239.49 share price. The firm cited continued execution, manageable memory concerns, and a valuation of 10x forward earnings versus a 26.29x trailing P/E, while also raising estimates. Recent Q1 fiscal 2026 results were solid, with EPS of $4.75 beating consensus by 11.5% and revenue of $1.5 billion topping expectations by 1.35%.

Analysis

The cleanest read-through is not just that ZBRA is defending earnings; it is that the market is likely underestimating the duration of its margin resilience versus the cycle. If management is truly keeping visibility through year-end while demand is merely normalizing rather than deteriorating, the setup supports multiple expansion as the “memory overhang” fades and investors re-rate the stock on earnings power instead of fears of a demand cliff. That matters because this is the kind of name where a small change in confidence can move the multiple more than the EPS estimate.

Second-order benefit accrues to the broader warehouse automation / supply-chain digitization complex. If customers are still buying through an industrial slowdown, it implies end-market automation budgets are less discretionary than the market assumed, which is constructive for adjacent hardware and software names with similar exposure to labor substitution. The key implication is that the supposed terminal-value bear case may be too linear: lower human headcount at facilities does not necessarily reduce device intensity if throughput, traceability, and uptime requirements rise.

The main risk is timing. This is a quality-value re-rating story that can fail if macro softness pushes enterprise buyers to defer fleet refreshes over the next 1-2 quarters, even if long-term economics remain intact. A second risk is that the stock’s current multiple already reflects some recovery; if earnings estimates rise but the market keeps the forward P/E compressed, upside becomes more of an execution story than a valuation one.

The contrarian angle is that consensus may be too focused on “less labor = less Zebra,” when the more likely outcome is that labor scarcity and automation increase the value of Zebra’s installed base. The market also may be underappreciating how much of the downside case was already priced in by the prior memory concerns; if that thesis keeps failing, the stock can grind higher on de-risking alone before any meaningful acceleration in top-line growth.

Key Decisions for Investors

• Go long ZBRA over the next 1-2 weeks on any post-rally consolidation; target a move toward the low-$300s over 3-6 months as estimate revisions and multiple recovery converge, with downside defined by a break back below recent support.
• Pair trade: long ZBRA / short a more economically sensitive industrial hardware peer with similar automation exposure but weaker margins; thesis is that ZBRA’s execution durability should outperform if industrial spending stays uneven.
• Buy ZBRA call spreads 3-6 months out to express a re-rating view with defined risk; structure for 2:1 or better payoff if the stock re-rates from a mid-20s P/E toward the low-30s on stable earnings power.
• Use any sharp move higher in the next few sessions to trim and re-add on dips rather than chasing; the trade works best if the market slowly accepts the revised earnings base, not if it tries to front-run a perfect cyclical rebound.
• Watch for downside invalidation if channel checks show deferred refreshes in the next quarter; that would argue for reducing exposure quickly because the stock is still sensitive to a perception shift in booking durability.