Sonos Eases Tariff Pressure to Improve Margin Outlook, Morgan Stanley Says

MT Newswires Live11-07

Sonos (SONO) has sharply reduced the impact of tariffs and improved margins through pricing actions and supplier cost-sharing, Morgan Stanley said in a note Thursday.

The firm said the company's efforts have cut what could have been a 300 to 400 basis point hit from tariff costs to 0 to 100 basis points, leading to a stronger margin outlook for fiscal 2026.

Morgan Stanley said the improved cost structure combined with flattish operating expenses show early signs of execution under new CEO Tom Conrad.

The firm said the new CEO's strategy to improve the software experience, broaden the Sonos system and expand into conversational artificial intelligence creates upside, with a potential to expand the average devices per house.

Morgan Stanley models a 2% year-over-year revenue growth in 2026 with new product launches driving gains in H2.

Morgan Stanley upgraded Sonos to equal-weight from underweight and raised its price target to $17 from $11.

Price: 16.16, Change: -0.48, Percent Change: -2.88

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