Cognex Shares May Take a Breather After a Strong Run, Canaccord Downgrades to Hold

Cognex Corporation CGNX shares have appreciated 30 percent year-to-date, rising 55 percent from their January lows.

Canaccord Genuity’s Bobby Burleson downgraded the rating on the company from Buy to Hold, with a price target of $45.

Range Bound In 2016

“While we continue to expect CGNX to benefit from growing deployment of machine vision in factory automation and logistics, we do not see catalysts for substantial upside to our estimates for the remainder of 2016,” Burleson mentioned.

With the stock valuation close to its historical peaks, the analyst believes that the shares will be range bound through the remainder of the year.

However, Burleson expressed optimism regarding 2017, given the signs of material traction in mobile terminals, along with a more diversified base of large orders for the company.

Related Link: Bernstein Initiates Coverage On Cognex At Market Perform, Announces $40.10 PT

No Near-Term Catalysts

Although the analyst believes that the company is poised for robust long term growth, driven by consumer electronics and the logistics industry, near term catalysts appear to be missing.

In addition, with Cognex’s largest customer, Apple Inc. AAPL, which represented 18 percent of the revenues for 2015, having limited visibility into demand, there is uncertainty regarding spending by Apple, while is likely to weigh of Cognex’s stock into early 2017.

“We could get more constructive on CGNX with news of large orders from other major consumer electronics customers or enhanced visibility into contributions from the recently announced mobile terminal product line,” Burleson added.