Why This Cognex Analyst Is No Longer Bullish

Temporary setbacks in inventory loss, project deferrals in logistics, and FX/component costs headwinds are weighing on Cognex Corporation’s CGNX short term success since it is mostly a book and ship business, according to a JPMorgan analyst. 

The Cognex Analyst: Paul Chung downgraded Cognex from Neutral to Underweight while maintaining a $40 price target. 

The Cognex Takeaways: Cognex is trading at 25.5x the bank's CY23 PF EBITDA forecast, 34.7x its pro forma EPS, and ~8.1x on an EV/sales basis at 26%, 24%, and 27% discounts to the three-year average forward multiple respectively, Chung said in the downgrade note.

JPMorgan assigned a multiple of 17x its CY24 PF EBITDA or 6x on an EV/Sales basis as a discount to the three-year average of 35x. The multiple reflects lower multiples across its coverage, a tough macro environment, cost inflation increases, rising rates and supply constraints, the analysts said.    

"The assigned multiple is more in line with peers in the factory automation space given the growth and operating leverage, while at a slight discount to software design peers with more SaaS type models,” he said. 

CGNX Price Action: Shares of Cognex were down 0.41% to $48.28 Friday afternoon, according to Benzinga Pro.

Photo: Courtesy of Clayton Cardinalli on Unsplash.