Al Root

Shares of industrial and retail electronics provider Zebra Technologies were down in early trading despite solid numbers and growth forecast for 2025.

Things are getting better, just not as fast as Wall Street expected. What's more, trade, tariffs, and the U.S. dollar are weighing on investor sentiment.

Thursday morning, Zebra reported fourth-quarter earnings per share of $4, up 134% year over year. Wall Street was looking for $3.94. Sales came in at $1.33 billion, up 32% on a comparable basis, according to FactSet. Wall Street was looking for $1.32 billion.

Growth was "broad-based," according to the company, with double-digit-percentage gains in all major product categories, industries, and regions.

Still, shares were down 7.9% at $325.05, while the S&P 500 and Dow Jones Industrial Average were up about 0.6% and 0.2%, respectively.

The problem was guidance. For 2025, Zebra expects sales growth of about 5%. Wall Street was hoping for closer to 8%. The company expects earnings per share be about $15, up from 13.52 in 2024. Wall Street, however, was hoping for closer to earnings of $16 a share.

We "feel good about the business," CEO Bill Burns tells Barron's. "It's really visibility...that's causing us to be conservative."

Foreign-exchange rates will sap about 1% from full-year sales growth. The dollar has been strong against many foreign currencies lately, making sales generated outside the U.S. less valuable.

Tariffs have the potential to add about $20 million in costs. That's Zebra's initial quantification of the net impact of tariffs on Mexico and Chain, including actions taken to mitigate potential cost increases.

The impact of tariffs and trade wars on overall demand is harder to pin down, Burns adds. Zebra serves a host of industries, including cars, retail, logistics, and healthcare.

Zebra's quarter, guidance, and reaction to earnings illustrate what investors will be battling in 2025. The manufacturing economy is getting better, but some hard-to-quantify overhangs -- including trade and tariffs -- introduce volatility.

Through early trading Thursday, Zebra stock was down about 16% year to date and up about 33% over the past 12 months.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 13, 2025 11:37 ET (16:37 GMT)

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