Cognex Could Be On Cusp Of Large Order Inflow; Canaccord Is Buying

• Cognex Corporation CGNX shares have appreciated 3.56 percent over the past one month, although they are currently trading close to their 52 week low.
• Canaccord Genuity’s Bobby Burleson has upgraded the rating on the company from Hold to Buy, while raising the price target from $33 to $42.
• Burleson expects the company to see large orders coming in during 2016 and mentioned that the stock valuation offered an attractive entry point at the current levels.

According to the Canaccord Genuity report, “Despite recent weakness and near-term challenges, we remain bullish on secular growth drivers for machine vision and believe that CGNX is poised for long-term growth.”

Analyst Bobby Burleson elaborated that while the company benefited from large orders in 2014 and early 2015, such orders had diminished in recent times, with customers postponing spending due to macro uncertainties.

“Exiting 2015, any resumption of large orders would likely drive significant upside to expectations on easier comparisons,” Burleson said.

Burleson also believes that Cognex is able to maintain industry leading margins due to “the sophisticated software content incorporated into its products.”

The company is expected to be able sustain stable gross margin through macro headwinds, “especially following the recent divestiture of the lower-margin SISD business.”