Industrials

Report by BWS Financial

Hamed Khorsand reiterates a Buy on ARLO with a TP of $24 (40% upside), highlighting the company’s stronger-than-expected growth trajectory after surpassing $300m in ARR a month ahead of schedule. This milestone reflects success from consolidating subscription tiers and prioritising service revenue, including selling cameras below cost to drive post-trial subscription conversions. With over 50% hardware-to-subscription conversion, an upcoming product refresh and positive FCF, Hamed believes ARLO is attracting broader investor interest. Continued buybacks offsetting stock comp further support the bullish case.

Industrials

Report by Corto Capital Advisors

While Q3 managed to show modest revenue growth, Corto believes demand is slowing and product growth will continue to decline in 2025, placing pressure on ARLO's services business. The surveillance manufacturer faces multiple headwinds including lapping more difficult comparables, a potential pull-forward of orders by its largest customer, subscriber growth headwinds and regional weakness. Corto also flags multiple executives selling shares in recent months. Sees 40%+ downside.

Technology

Report by BWS Financial

ARLO recently announced it had reached 4m paid accounts approx. 4 months after achieving 3m accounts. While the pace of growth is most likely the result of catch-up calculations related to ARLO’s partner Verisure, this should not take away from the magnitude of the increase as Hamed Khorsand expects a portion of the sequential increase was the result of retail subscriber additions. He raises his 12-month TP from $17 to $24 (45% upside) ahead of the company reporting Q2 results supported by ARLO exiting 2024 with a higher ARR than he was originally forecasting.

Industrials

Report by BWS Financial

ARLO's stock has underperformed the fundamentals as investors seem keen on guessing when growth will slow down. The leader in home monitoring IP cameras has maintained its rate of quarterly net subscriber adds throughout 2023 and is poised to cross 3m paid subscribers by the middle of 2024. The introduction of a new security service and lower price camera options should enhance its market share and provide greater ability to generate positive FCF. Management anticipates a record-breaking Q4. Hamed Khorsand continues to believe the stock is being treated more as hardware business than for the recuring service revenue. 12-month TP $17 (85% upside).