Zebra Technologies (ZBRA) posted Q4 upside given a stronger-than-expected retail environment, but the company remains cautious heading into 2025 due to uncertainty around tariffs, the broader economy, and the strong dollar, Morgan Stanley said in a note late Thursday.

The analysts said the demand environment for Zebra continued to improve in Q4, particularly in mobile computing, data capture, and printing, especially with large retailers, while the manufacturing segment still lagged. Zebra noted that Radio Frequency Identification saw strong growth, while machine vision and Matrox declined due to weakness in manufacturing and the semiconductor industry. The management also mentioned that the acquisition of Photoneo is expected to close in Q1.

While Morgan Stanley increased its Q1 estimates for non-GAAP revenue and earnings per share to $1.29 billion and $3.60, from $1.26 billion and $3.51 previously, the firm lowered its 2025 forecasts to $5.23 billion and $15.06, from $5.30 billion and $15.65 previously.

The analysts said they "continue to believe the [next twelve months] demand environment sets-up well as large customer activity normalizes, though more material upside requires an inflection in non-core businesses."

Morgan Stanley kept its equal-weight rating on the stock, while lowering its price target to $390 from $427 due to near-term uncertainty regarding foreign exchange and tariff impact.

Price: 316.70, Change: -6.73, Percent Change: -2.08