ZBRA · Zebra Technologies
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $362
Note written ·
How this view changed
- · Rating cut from Medium to Low. The note's kill line was crossed, 3 November 2026: Zebra Technologies shares closed at $329.50 on 3 November 2026, below the published $346.00 kill line, after a third-quarter report in which memory costs cut gross margin to 45.7% from 48.0%.
Price against the kill line
10.5% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $362.00, on record since 11 November 2026. The shares are down 12.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $362, over the $361.26 close of 30 October 2026 before the third-quarter report, which would show the shares have recovered the post-report decline and are leading again. Q4 FY26 adjusted EPS above the $5.40 top of guidance would also show the margin worry overdone.
Research onlyNot in the portfolio.
Key figures from the filings · Industrials
Quarter to 3 October 2026, filed 3 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,614
- Revenue, change on a year (%)
- +22.3
- Gross margin (%)
- 45.7
- Operating margin (%)
- 14.7
- Free cash flow, four quarters ($M)
- 988
- Net cash, cash less debt ($M)
- −2,396
- Price to earnings (×)
- 25.3
- Enterprise value to sales (×)
- 2.9
All filed numbers
What Zebra Technologies reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 1,614 | +22.3 | 45.7 | 14.7 |
| first filed | 1,557 | +20.4 | 53.0 | 20.6 |
| first filed | 1,495 | +14.3 | 49.6 | 14.4 |
| first filed | 1,475 | +10.6 | 47.3 | 9.4 |
| first filed | 1,320 | +5.2 | 48.0 | 13.9 |
| first filed | 1,293 | +6.2 | 47.6 | 14.2 |
| Pre-tax income ($M) | 198 |
| Net income ($M) four quarters: 602 | 164 |
| Diluted shares, change on a year (%) against the quarter to 27 September 2025 | −6.6 |
| Operating cash flow ($M) | 1,068 |
| Capital spending ($M) | 80.0 |
| Free cash flow ($M) | 988 |
| Cash and short-term investments ($M) | 182 |
| Debt ($M) long-term debt | 2,578 |
| Net cash, cash less debt ($M) | −2,396 |
| Deferred revenue ($M) +10.1% on a year | 852 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 1,025 |
| Inventory ($M) | 851 |
| Shareholders' equity ($M) | 3,568 |
| Market value ($M) | 15,256 |
| Enterprise value, market value plus net debt ($M) | 17,652 |
| Enterprise value to sales (×) | 2.9 |
| Enterprise value to operating income (×) | 19.4 |
| Price to earnings (×) | 25.3 |
| Price to book value (×) | 4.3 |
| Free-cash-flow yield (%) | 6.5 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.1% of shares outstanding sold short, 3.3 days of average trading to cover, −12.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $387K | $2.4M |
The thesis
Zebra Technologies' shares are more likely to lag the S&P 500 over the next three months. The third-quarter (Q3) FY26 report beat on sales and earnings, but memory-chip costs cut gross margin, and management expects those costs to keep rising through the first half of 2027. The fourth-quarter report, expected in February 2027, shows whether price increases close the gap.
The published $346.00 kill line was crossed on 3 November 2026, when the shares closed at $329.50 on the day of the Q3 report. That crossing showed the market weighing the margin squeeze above the beat and the raised outlook. The case for the shares leading did not hold, and the rating is Low because no result since then has shown memory costs easing.
Zebra reported Q3 net sales of $1,614 million on 3 November 2026, up 22.3% reported and 11.3% organic. Adjusted earnings per share (EPS) were $4.95 against $3.88 a year earlier (Q3 FY26 press release, filed as an 8-K exhibit). That cleared the $4.70–$4.90 company guidance but fell short of the $5.00 consensus Earnings Whispers had published. GAAP gross margin fell to 45.7% from 48.0%, which Zebra put down mainly to memory component costs and mix.
What the price reflects: at the $327.44 close on 11 November 2026, the shares trade below their pre-report level even though Zebra raised its 2026 sales guidance to $6.313 billion on 3 November 2026 (Benzinga). The market is pricing a margin problem that runs into 2027, not the 2026 numbers.
Bullish and bearish views on Zebra Technologies Corporation
The bull case on Zebra Technologies Corporation (ZBRA), in brief: sales growth is broad and organic. The bear case: memory costs keep climbing into 2027.
Bull case
- Sales growth is broad and organic. Q3 organic growth was 11.3%. Connected Frontline sales were $949 million, up 15.0% organic, and Asset Visibility & Automation sales were $665 million, up 7.0% organic (Q3 FY26 press release, 3 November 2026).
- Full-year guidance moved up again. On 3 November 2026 Zebra narrowed FY26 adjusted EPS guidance to $21.20 from $20.75–$21.25, against a $20.89 analyst estimate. It raised sales guidance to $6.313 billion from $6.151–$6.259 billion (Benzinga, 3 November 2026).
- Fourth-quarter guide sits above the street. Zebra guided Q4 adjusted EPS of $5.00–$5.40, sales growth of 10%–14% and an adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) margin of about 22%. Benzinga put Q4 consensus at $5.18 on 3 November 2026.
- Cash flow funds buybacks. Nine-month free cash flow was $661 million, and repurchases reached $643 million, $75 million of it in Q3. Zebra guides FY26 free cash flow of at least $1 billion (Q3 FY26 press release).
- Most new targets sit above the price. On 4 November 2026 Barclays kept Overweight and raised its target to $432, and BNP Paribas kept Outperform at $455 (Benzinga). Jefferies initiated at Buy with a $382 target on 11 November 2026.
Bear case
- Memory costs keep climbing into 2027. Chief Financial Officer Nathan Winters raised the 2026 memory-cost estimate by $25 million to about $145 million and expects memory prices to rise through the first half of 2027 before easing (Benzinga, 3 November 2026).
- Pricing covered only about half. Management said on the 3 November 2026 earnings call that price actions offset nearly 50% of the Q3 memory cost increase. Zebra added further price increases in early October aimed at 2027 costs.
- Margins have stopped expanding. Q3 adjusted gross margin fell to 46.0% from 48.2%, and adjusted EBITDA of $349 million was a 21.6% margin, flat on a year earlier (Q3 FY26 press release). Q4 is guided at about 22% again.
- Reported growth leans on deals and currency. Q3 reported growth of 22.3% compares with 11.3% organic. Q4's 10%–14% guide includes about 150 basis points of favourable currency (Q3 FY26 press release).
- Large debt falls due within a year. At 3 October 2026, $2,077 million of $2,578 million total debt was classified current, against $182 million of cash. The Q3 release describes no refinancing.
- Targets are coming down from the top. Rothschild & Co Redburn cut its target to $427 from $454 on 9 November 2026. Citigroup kept Neutral and cut to $398, and Morgan Stanley kept Equal-Weight at $380, both on 4 November 2026 (Benzinga).
Price setup
The shares closed at $329.50 on 3 November 2026, the report day, against $361.26 on 30 October 2026. Benzinga reported a fall of more than 7% that session. That close took the shares through the published $346.00 kill line.
Since the report the shares have held between a $321.38 close on 10 November 2026 and a $332.44 close on 4 November 2026. They closed at $327.44 on 11 November 2026. That close is below the 50-day moving average of $363.04 and above the 200-day moving average of $283.45, both as of 11 November 2026 on adjusted daily closes.
The 52-week intraday high is $392.78, set on 21 October 2026, and the last close is 16.6% below it. The three-month change is −13.7%, measured from a $379.63 close on 13 August 2026. The 52-week closing low is $199.30 on 30 March 2026. The post-report range sits well under the 50-day average, so the October advance is undone and the shares have not yet regained it.
Catalysts ahead
- ~10 February 2027 (est.): Q4 FY26 results and first FY27 outlook; date not yet announced by Zebra. Shows whether early-October price increases lift the adjusted EBITDA margin above the roughly 22% guide, whether Q4 EPS lands above the $5.00-$5.40 range, and what 2027 memory-cost estimate management gives.
What would change the view
A daily close above $362, over the $361.26 close of 30 October 2026 before the third-quarter report, which would show the shares have recovered the post-report decline and are leading again. Q4 FY26 adjusted EPS above the $5.40 top of guidance would also show the margin worry overdone.
The line before it, a daily close below $346.00 set on 2 November 2026, was crossed on 3 November 2026: the shares closed at $329.50.
What it trades with
Zebra sells handheld computers, barcode scanners, printers, RFID and machine vision to retailers, logistics firms and manufacturers. The shares benefit second-hand from retail, warehouse and factory automation spending. They now also trade on memory-chip prices, which set component costs. On 3 November 2026 Apple issued its own memory-cost margin warning the same day Zebra fell (Benzinga), so hardware makers that buy memory are moving on the same input. The Elo Touch acquisition and currency make reported growth run well ahead of organic growth.
The evidence, claim by claim (8)
- Q3 FY26 net sales $1,614M, up 22.3% reported and 11.3% organic; non-GAAP diluted EPS $4.95 vs $3.88; GAAP diluted EPS $3.43 vs $1.97. Zebra Q3 FY26 results press release (8-K Exhibit 99.1) · as of
- Q3 FY26 GAAP gross margin 45.7% vs 48.0%; adjusted gross margin 46.0% vs 48.2%; adjusted EBITDA $349M, a 21.6% margin, flat year on year. Zebra Q3 FY26 results press release (8-K Exhibit 99.1) · as of
- Connected Frontline sales $949M (+15.0% organic); Asset Visibility & Automation sales $665M (+7.0% organic). Zebra Q3 FY26 results press release (8-K Exhibit 99.1) · as of
- Q4 FY26 guidance: sales growth 10%-14% including about 150 bp favourable currency, adjusted EBITDA margin about 22%, non-GAAP EPS $5.00-$5.40. Zebra Q3 FY26 results press release (8-K Exhibit 99.1) · as of
- FY26 adjusted EPS guidance narrowed to $21.20 from $20.75-$21.25; FY26 sales guidance raised to $6.313B from $6.151B-$6.259B. Benzinga, 3 November 2026 · as of
- CFO raised the 2026 memory-cost estimate by $25M to about $145M and expects memory prices to keep rising through the first half of 2027. Benzinga, 'Zebra Technologies Warns Memory Prices Will Keep Rising Into 2027' · as of
- Nine-month FY26 free cash flow $661M; repurchases $643M year to date ($75M in Q3); cash $182M; total debt $2,578M with $2,077M current. Zebra Q3 FY26 results press release (8-K Exhibit 99.1) · as of
- Post-report targets: Barclays Overweight $432, BNP Paribas Outperform $455, Citigroup Neutral $398, Morgan Stanley Equal-Weight $380 (4 November 2026); Redburn $427 from $454 (9 November 2026); Jefferies Buy $382 (11 November 2026). Benzinga and fiscal.ai analyst-rating reports · as of
Sources
- ZEBRA TECHNOLOGIES CORP - Form 8-K - FY2026 · sec.gov
- Zebra Technologies Warns Memory Prices Will Keep Rising Into 2027 · webull.com ·
- Zebra Technologies Announces Third Quarter 2026 Results · zebra.com
- Zebra (ZBRA) Q3 2026 Earnings Call Transcript · webull.com
- ZBRA Zebra Technologies Corporation · earningswhispers.com