A Machine Vision Firm Shocked Investors With An Improved Outlook Despite Recession Worries. Its Analyst Day Is Imminent

Needham analyst James Ricchiuti maintained Cognex Corp CGNX with a Buy and raised the price target from $50 to $52 with the potential for upward revisions to estimates over the next 12-15 months.

CGNX raised its Q3'22 guidance ahead of its triennial Analyst Day meeting on September 20 at its Natick, MA, headquarters. 

At the revised guidance's midpoint, revenues are likely 11%-25% above the prior range given on August 2. 

The upside is mainly the result of CGNX fulfilling existing customer orders sooner than expected, as its primary contract manufacturer was able to replenish component inventory destroyed in a previously disclosed fire in Q2 sooner than expected. 

CGNX also updated its medium-to-long-term CAGR target to 15% from the 20% long-term CAGR the company highlighted at its last investor day in 2019. 

While Ricchiuti expects the macro environment to remain a headwind for CGNX, he was encouraged by the improving execution going into its analyst day meeting. 

After delivering an impressive performance in 2021, supply chain challenges, weaker demand in the logistics market, and significant disruption in Q2 from a fire at a facility operated by its major contract manufacturer affected its 2022 performance. 

Although the logistics market slowdown and increased macro uncertainty are likely to impact CGNX over the near term, he still saw growth drivers in logistics, auto EV, and deep-learning machine vision long term.

Raymond James analyst Brian Gesuale reiterated a Strong Buy and $75 price target. The higher guide is primarily due to the company's ability to fulfill customer demand sooner than anticipated due to progress in replenishing component inventory destroyed by the June fire, he noted.

Gesuale expects to get more color on the long-term outlook, and the puts/takes of each market tomorrow.

Gesuale was also pleased to see a higher long-term CAGR go from 12% to 15% on a more extensive base, reflecting the company's strong competitive position, product development success, and solid secular tailwinds. 

Tha analyst is looking forward to Cognex's inaugural Sustainability Report and product demonstrations and will follow up as needed with additional details from the Analyst Day.

Price Action: CGNX shares traded higher by 7.86% at $45 on the last check Tuesday.

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