Lantronix, Inc. LTRX stock has plunged 26.8% in a month amid tumbling indices. Over the same time frame, the Zacks Computer - Networking industry declined 5.9%. The broader Computer and Technology sector and S&P 500 Composite have registered declines of 6.6% and 4.7%, respectively, in the same period. Recent escalating trade tensions, potential supply chain disruptions and a possibility of a global economic slowdown led to a broader market sell-off.

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Is the dip in stock price a buying opportunity, or should investors stay away from it? Let’s discuss.

LTRX’s Tailwinds

Lantronix strengthens ties, collaborates with local enterprises and demonstrates its advanced IoT solutions for digital transformation across industries. Recently, it showcased its state-of-the-art embedded compute, Industrial IoT (IIoT) and out-of-band management solutions at the Embedded Tech India Expo 2025. The company’s IIoT portfolio consists of high-performance routers, modems, IIoT cellular gateways and telematic devices designed to ensure reliable connectivity, remote management and real-time data processing.

The company also displayed its SmartLV, the first AI-enabled IoT Edge Compute Cellular Gateway, at Embedded World (March 11-13, 2025) in Nuremberg, Germany. The SmartLV demo exhibited real-world applications, including real-time monitoring of power consumption in low-voltage grids. By integrating this data with real-time pricing information, grid operators can optimize power distribution while users can effectively manage costs.

LTRX is expanding its partnership with Qualcomm to bring AI-powered real-time analytics to edge systems. New projects include banking analytics, electronics quality control and smart farming. Lantronix remains focused on gaining customers and securing design wins.

Lantronix, Inc. Price and Consensus

Lantronix, Inc. price-consensus-chart | Lantronix, Inc. Quote

In the second quarter, Lantronix acquired NetComm for $6.5 million, expanding its Connect business with 4G and 5G gateways. The integration is progressing well, with key customer engagements, including Vodafone. The company sees growth potential in Australia and New Zealand.

Lantronix Engineering Services provides turn-key product development support for Open-Q platforms and kits. With expertise in more than 1,500 successful products, the team specializes in camera tuning, voice control, machine learning, RF and mechanical design and power optimization. Offering cost-effective solutions, Lantronix helps developers bring innovations to market faster.

Recently, LTRX introduced its latest offering, the Open-Q 8550CS System-on-Module. Powered by Qualcomm’s Dragonwing QCS8550 processor, this production-ready module is designed to bring low-power, high-performance AI and Machine Learning capabilities to Edge computing. This innovation aims to accelerate the development of AI-driven applications across a broad spectrum of industries, such as smart warehousing, manufacturing, transportation, logistics and retail.

LTRX Trades at a Discount

In terms of the forward 12-month Price/Sales ratio, LTRX is trading at 0.58, lower than the industry’s multiple of 3.74.

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Lantronix’s Headwinds

Despite strategic acquisitions and robust innovations, challenges persist in the IoT System Solutions and Software & Services segments. In the second quarter of fiscal 2025, IoT System Solutions revenues (contributed 59.7% to total revenues) decreased 19.2% year over year. Embedded IoT Solutions revenues (contributed 34.6% to total revenues) in the reported quarter plunged 8.3% year over year. Embedded IoT Solutions revenues declined due to reduced orders from key automotive customers and a slight enterprise market slowdown. Also, Software & Services revenues (5.7%) were down 20.7% year over year.

Overall, the company’s top line decreased 15.9% year over year due to reduced orders from its top automotive customers and slightly lower activity in the enterprise market.

Notably, analysts have not changed their earnings estimates in the past 60 days, signaling a wait-and-watch approach.

How Should Investors Play LTRX Stock?

LTRX continues to benefit from the strength of its unique portfolio, ongoing innovation and recent developments. However, persistent challenges in the IoT System Solutions and Software & Services segments raise concerns.

Therefore, we believe new investors should wait for a better entry point, and existing investors should retain the LTRX stock, which currently carries a Zacks Rank #3 (Hold).

Stocks to Consider From Computer Networking Space

Some better-ranked stocks from the broader technology space are Cisco Systems, Inc. CSCO, NETGEAR, Inc. NTGR and Intrusion Inc. INTZ. CSCO, NTGR and INTZ presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CSCO’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 4.07%. In the last reported quarter, Cisco delivered an earnings surprise of 3.3%. The company’s long-term earnings growth rate is 5.1%.  Its shares have surged 19.8% in the past year.

NTGR earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 151.77%. In the last reported quarter, NETGEAR delivered an earnings surprise of 76%. Its shares have surged 60.9% in the past year.

INTZ’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with the average surprise being 4.73%. Its shares have surged 59.4% in the past six months.

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This article originally published on Zacks Investment Research (zacks.com).

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