Cognex Corporation (NASDAQ:CGNX) shares are rallying today after the machine vision systems maker released its second-quarter results, posting $172.9 million in revenues and $0.63 in EPS, above guidance of $165 to $170 million in revenues, and beating consensus EPS estimate of $0.53. Looking forward, Cognex provided initial Q3 guidance of $250-$260 million in revenues which is significantly ahead of consensus estimates of $176-180 million.
Burleson commented, “CGNX delivered another beat and a healthy raise last night, with the outlook for Q3 substantially above consensus and our estimates, driven by Apple, OLED, and continuing logistics strength. While the secular growth story is compelling, and we expect the stock to be up today on higher estimates (we are raising our 2018 EPS ~10%), we expect the stock to be range bound. Our cautious outlook is based on the optics of peaking annual revenue growth in 2017, a substantial absolute valuation and premium versus historical metrics (PE 42x NTM versus 30x 5 year average), and a potential headwind on the core business from slowing autos (roughly 30% of total revenues).”
Overall, the Street is mixed on CGNX. Out of the 10 analysts polled in the past 12 months, 6 rate Cognex stock a Hold, while 4 rate the stock a Buy. With a downside potential of 27%, the stock’s consensus target price stands at $77.63.