Symbotic(NASDAQ: SYM) stock posted explosive gains in Thursday's trading. The robotics specialist's share price closed out the session up 18.4% and had been up as much as 21.5% earlier in the day's trading.
Symbotic published a press release today announcing that it had entered into contractual agreements with Walmex -- Walmart's division for operations in Mexico and Central America. The new deal will see Symbotic deploy its automation systems in two distribution centers in Mexico.
Symbotic's Walmex wins look promising
The recent announcement that Walmex will be adopting new automation systems at two facilities appears to have assuaged investor concerns that Symbotic's growth engine is weakening. Contracts with Walmart account for the majority of Symbotic's revenue, and the robotics specialist's stock has faced pressures amid concerns of weakening demand.
Symbotic stock plummeted late in July after the company published results for the fourth quarter of its last fiscal year, which ended July 29. But news of contract wins with Walmex suggests that the business may be on track to significantly outperform the underwhelming guidance that previously triggered big sell-offs for the stock. Even with today's valuation surge, Symbotic's share price is still down roughly 46% across 2024's trading.
Symbotic still has big international expansion potential
With the quarterly report that it published at the end of July, Symbotic guided for the next quarter's sales to come in between $455 million and $475 million. While the midpoint of that guidance pointed to annual sales growth of approximately 19%, the midpoint target also suggested a sequential quarterly decline of roughly 5.5% from the roughly $491.9 million in sales it posted in its fiscal third quarter.
With the benefit of a new contract win, it's possible that Symbotic's sales in the current quarter will significantly exceed the guidance management issued with its most recent update. More importantly, the new contract signals that Walmart could still be in the early stages of integrating Symbotic's technologies across its warehouse and distribution centers.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
