Two top London investment banks are encouraging investors to get a slice of Raspberry Pi, the British chip company poised for growth reminiscent of other big tech stocks such as Microsoft, Apple and Nvidia.
Jefferies analysts have rated Raspberry Pi a ‘buy’ with a target price of 448p, while Peel Hunt rated it an ‘add’ with a target of 439p.
Currently, Raspberry Pi shares are trading at almost 400p, up from their initial 280p when the Cambridge-based company listed on the London Stock Exchange in June. The company’s IPO was highly oversubscribed, causing shares to jump to 360p shortly after trading began.
Raspberry Pi makes single-board computers (SBCs), which are small, affordable computers with a built in microchip and memory.
SBCs are becoming crucial to the artificial intelligence (AI) and machine learning revolution. This is especially the case in industrial applications such as Internet of Things (IoT) and Edge computing, where data is moved from the cloud to nearer the user in order to speed up processing.
In a research report on Monday, Jefferies analysts predicted that Rapsberry Pi is well positioned for this shift. “While the AI focus so far has been mainly in the cloud, we expect increasing demand for Edge AI IoT devices,” they said.
They forecast sales to the industrial customers will grow at 18 per cent annually from 2023 to 2026, driven by sales to larger clients. This growth, Jefferies said, is backed by Raspberry Pi’s “strong brand, reputation for quality and go-to-market strategy”.
Revenues have already been impressive, growing at 37 per cent annually from 2021 to 2023. While total revenue growth might slow in 2024 due to inventory issues, Jefferies expects it to pick back up again, reaching 14.5 per cent annually from 2024 to 2026.
Peel Hunt is expecting a similar 13 per cent annual growth from 2023 to 2026 as analysts there also believe Edge computing could be a game-changer for Raspberry Pi.
“Edge computing is set to do to Raspberry Pi what the desktop did to Microsoft, the smartphone did to Apple and the datacentre is doing to Nvidia,” analysts at the broker said in their report.