Berkshire Grey is an emerging player in warehouse automation and robotics. As ecommerce continues rapid growth, the need for automated fulfillment centers rises. Berkshire Grey provides robotic picking, sorting, and inventory management solutions tailored to customers’ needs. With strong demand drivers, innovative technology, and blue chip customers like Walmart, Berkshire Grey has excellent prospects if execution goes smoothly. However, as a newly public company investing heavily for growth, Berkshire risks and volatility are higher than mature firms. Investors bullish on robotics and automation should research Berkshire Grey closely, while more conservative investors may prefer watching from the sidelines.
Berkshire Grey’s order pipeline points to strong top line growth
Berkshire Grey went public via SPAC in 2021, and has guided for 100%+ revenue growth in 2022. As a key indicator, their 12-18 month order pipeline grew from $1.3 billion entering 2021 to over $2 billion by Q3 2021. Major customers include leaders like Walmart, Target and FedEx who are making big investments in warehouse automation. The pandemic has accelerated ecommerce growth, leading to surging demand for logistics solutions.
Unproven new public company with risks to weigh
While Berkshire Grey’s top line growth outlook is strong, its still a new public company investing heavily to scale. Expanding production and its sales force results in high costs and losses near-term. Execution risks also exist around manufacturing ramp up and deploying robots at customer sites. Macro concerns like supply chain issues or an ecommerce slowdown could also dampen growth.
Valuation not cheap but may have upside if execution is strong
Berkshire Grey trades around 5x 2022 expected sales, which is high but not unreasonable for a fast-growing robotics play. If they can demonstrate solid revenue growth and improving margins over the next few quarters, the stock likely re-rates higher. However, any stumbles or downside surprises could lead to a painful selloff from today’s levels. Investors need a 3-5 year time horizon.
With promising demand drivers but high risks as a new public company, Berkshire Grey is an intriguing robotics investment at the right valuation. Astute investors could see material upside, but require an understanding of the challenges involved in scaling production and deploying advanced automation technologies.