Cognex's Premium Valuation Vulnerable To Worse Logistics Prospects Led By Amazon, Analyst Says

  • Morgan Stanley analyst Joshua Pokrzywinski downgraded Cognex Corp CGNX from Equal-Weight to Underweight and lowered the price target from $41 to $40.
  • The analyst believes logistics could be much worse than is implied in 50% of 2023. 
  • Inc AMZN, CGNX's most significant customer, has been vocal about cutting its fulfillment and warehouse Capex in 2022 and 2023, and the analyst saw Amazon having excess fulfillment capacity until 4Q24 or even 2025. 
  • The analyst saw organic declines in 2023 without a significant logistics snap back in 2024, which could pressure CGNX's historical premium valuation. 
  • Based on a bottom-up growth build-up, the analyst believes consensus revenue growth estimates a logistics market that is roughly flat in 2023. 
  • The analyst believes the market could be materially worse than that and saw a more muted recovery in 2024. 
  • The company has limited disclosure and uses geographic segment reporting despite investors primarily looking at CGNX based on its end markets. 
  • The analyst modeled CGNX on its end markets using management commentary and critical customer and end market Capex. 
  • Price Action: CGNX shares traded lower by 4.47% at $50.82 on the last check Tuesday.
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