Cautious Hold Rating on Samsara Amid Valuation Concerns and Macroeconomic Challenges

Morgan Stanley analyst Keith Weiss has reiterated their neutral stance on IOT stock, giving a Hold rating yesterday.

Keith Weiss has given his Hold rating due to a combination of factors surrounding Samsara’s recent performance and market conditions. Despite a strong increase in share price over the past month, the company’s valuation at approximately 15 times EV/CY26 sales suggests limited room for any slowdown in growth. While Samsara reported a 32% constant currency revenue growth and an 8% growth in Net New Annual Recurring Revenue (NNARR), these figures fell short of elevated expectations, indicating a deceleration that the current stock price does not accommodate.
Additionally, Samsara faced macroeconomic challenges, such as elongated sales cycles, which were influenced by customers prioritizing spending on tariff-impacted goods. Although this resulted in a narrower beat compared to historical performances, the company remains resilient with a strong platform story and solid demand trends. The addition of significant customers and impressive margin performance, including a 79% gross margin, demonstrate the company’s operational strength. However, given the current market valuation and macroeconomic headwinds, a Hold rating reflects a cautious stance until more favorable buying opportunities arise.