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Earlier this month, analysts at Peel Hunt put a 1,085p price target on FTSE 250 tech stock Raspberry Pi (LSE: RPI). That’s roughly 64% higher than the current share price of 661p and if it was to be hit, £5,000 worth of shares today could soon be worth around £8,200.
Could the growth stock be worth a look given this bullish forecast? Let’s discuss.
The bull case
Looking at Raspberry Pi today, there’s certainly a lot to like from an investment perspective. For a start, revenues are surging – this year they’re expected to rise 88% year on year to £608m.
A key driver here is demand for the company’s miniature computers. Recently, demand has been very high as people have been buying them to build AI applications.
Another revenue driver is demand for the company’s chips. Last year, chip shipments rose 47% year on year.
Note that in a recent trading update, the company said that it expects to ship over 4m units for the first half of 2026. Last year, it shipped 3.6m units in the first half of the year.
I also like the fact that the company has a huge fanbase. On Reddit, the Raspberry Pi subreddit has over 3.3m followers.
This reminds me a little of Games Workshop (which has been an incredible long-term investment). While the company and its products may not be mainstream, it has an army of loyal enthusiasts.
A third plus is that the company is profitable and sports a strong balance sheet. So, it’s not as risky as some other tech stocks.
Finally, I like the fact that the share price has come down recently. Right now, there’s not much hype around the stock.
The bear case
On the downside, there’s some uncertainty in relation to near-term profit margins given the spike in memory costs recently. In the most recent trading update, the company said that unit economics are expected to ‘moderate’ in the second half of 2026 as the inventory of memory obtained at lower costs is depleted.
Additionally, there’s some uncertainty around competition. Could copycat products from China capture market share in the future?
Another issue is that the CEO and the Chief Commercial Officer sold a ton of stock in mid-June. Insiders sell stock for many reasons but there’s a chance they were selling because they expect growth and/or profitability to moderate.
The valuation also adds some risk. Looking at earnings forecasts for 2026, the forward-looking price-to-earnings (P/E) ratio is about 50.
A high-risk, high-reward opportunity?
Weighing up all this, I see Raspberry Pi shares as a high-risk, high-reward opportunity that could be worth considering. There’s certainly a lot of potential, however, risk levels are relatively high.
Personally, I’m going to leave the stock on my watchlist for now as I want to get a little more information on memory costs and profitability. But I may end up having a nibble here at some point in the near future.
Should you invest £5,000 in Raspberry Pi Plc right now?
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Edward Sheldon does not hold any positions in the companies mentioned
This story originally appeared on Motley Fool
