Sonos, Inc. (SONO) shares rose more than 5% during trading on Tuesday after Citron Research’s Andrew Left appeared on Fox Business News, saying he has a long position. The left believes that the stock is a forgotten beneficiary of the COVID-19 lock and sees it as a potential acquisition target for Apple Inc. (AAPL) or Amazon.com, Inc. (AMZN).
Other analysts also see the opportunity to Sonos stock. In April, Raymond James reiterated its strong Buy and $19 price target, saying that Sonos Radio could lead to significantly higher multiples due to the platform approach. Analyst Adam Tindle said that the stock currently trades at par with the other consumer products hardware plays” such as GoPro, Inc. (GPRO).
On the other hand, some analysts believe that Sonos’ privileged position on the market could hurt demand. Goldman Sachs analyst Rod Hall downgraded the stock to Sell and lowered its price target from $20 to $7.50, saying that the company’s products are typically at the higher end of the pricing spectrum, and there could be a “severe reduction” in the loudspeaker of the application.
From a technical point of view, Sonos stock broke out during the session on Tuesday from its 200-day moving average to new highs, which has not been seen since the month of February. The relative strength index (RSI) has climbed into overbought territory with a reading of 71.31, but the moving average convergence divergence (MACD) remains in a bullish trend.
Traders should watch for a period of consolidation above the 200-day moving average in the coming sessions. If the stock rebounds more, traders could see a move to test the reaction of the summits of almost $17.00 made at the beginning of February. If the stock breaks the 200-day support level, traders could see a move lower towards the trend line resistance at around $11.00.
The author holds no position in the stock(s) mentioned except through the passive management of index funds.