Last Update 07 Dec 25

KRNT: Recurring Revenue Momentum Will Drive Future Margin Expansion And Earnings Predictability

Analysts have trimmed their price targets on Kornit Digital, with estimates moving down by up to $5 per share as they balance solid Q3 revenue growth, improving profitability, and recurring revenue momentum against a more cautious outlook for the shares.

Analyst Commentary

Analyst reactions to the quarter highlight a mix of constructive operational trends and tempered expectations for the stock, reflected in lower price targets clustered in the mid-teens to around $20 per share.

Bullish Takeaways

Bullish analysts emphasize the 5% year over year revenue growth, viewing the outperformance versus Street expectations as evidence that demand is stabilizing and can support a gradual return to sustainable top line expansion.
The return to positive adjusted EBITDA and a 2.1% margin, compared with consensus expectations for a loss, is seen as an important proof point that management’s efficiency initiatives are gaining traction and can enhance operating leverage over time.
Momentum in annual recurring revenue from services and software is highlighted as a key driver of higher quality, more predictable earnings, which could eventually warrant a higher valuation multiple if sustained.
Some bullish analysts argue that, even after the reduced targets, the implied upside from current trading levels remains attractive if the company can maintain revenue growth and steadily expand margins.

Bearish Takeaways

Bearish analysts focus on the decision to lower price targets into the $15 to $20 range, interpreting it as recognition that the pace of recovery and re-rating in the shares may be slower than previously anticipated.
The downgrade to a more neutral stance signals concern that near term upside is limited, as the current valuation already reflects a meaningful portion of the expected operational improvement.
There is caution that early profitability gains and recurring revenue momentum, while positive, still need to be demonstrated across multiple quarters before investors assign a premium growth multiple.
Some bearish analysts remain wary of execution risk and end market uncertainty, suggesting that any stumble on growth or margins could pressure the stock given the reduced, yet still growth oriented, expectations embedded in current targets.

What's in the News

Board authorizes a new share buyback plan on November 17, 2025, signaling confidence in the company's long term prospects (Key Developments).
Kornit launches a $100 million share repurchase program funded with cash on hand, subject to potential Israeli court approval if creditors object (Key Developments).
Planned CFO transition as Lauri Hanover steps down by mid December 2025, with seasoned finance executive Assaf Zipori joining as the new Chief Financial Officer (Key Developments).
Company issues fourth quarter 2025 revenue guidance of $56 million to $60 million, framing investor expectations for near term performance (Key Developments).
Kornit to showcase three major digital manufacturing innovations, including a new footwear solution and the All Inclusive Click business model, at ITMA Asia + CITME Singapore 2025 (Key Developments).

Valuation Changes

Fair Value: Unchanged at $19.50 per share. This indicates no adjustment to the intrinsic value estimate despite updated assumptions.
Discount Rate: Risen slightly from 10.34% to approximately 10.48%. This reflects a modest increase in perceived risk or required return.
Revenue Growth: Essentially unchanged, edging up marginally from about 3.02% to 3.02%. This implies a stable medium term growth outlook.
Net Profit Margin: Stable at roughly 9.29%, with only immaterial rounding differences. This suggests no meaningful change in long run profitability expectations.
Future P/E: Increased slightly from about 50.36x to 50.56x. This signals a modestly higher assumed valuation multiple on forward earnings.

Rising digital adoption, sustainability trends, and innovative offerings are expanding Kornit's addressable market, strengthening its position against traditional competitors.
Recurring revenue growth from its installed base and AIC model is improving margin stability and revenue predictability.
Slower adoption of new business models and products, combined with weak consumable sales and rising customer concentration, risks sustained margin pressure and unpredictable earnings.

Catalysts

About Kornit Digital

Develops, designs, and markets digital printing solutions for the fashion, apparel, and home decor segments of printed textile industry in the United States, Europe, the Middle East, Africa, the Asia Pacific, and internationally.What are the underlying business or industry changes driving this perspective?

Adoption of on-demand and mass-customization models by major apparel brands and print providers continues to accelerate, as seen by growing system utilization, new customer wins, and capacity expansions with large digital players; this supports future revenue growth through higher impressions and technology adoption.
Momentum in converting the traditionally analog screen-printing segment to digital remains strong, with increasing penetration among mid-sized and large print service providers, a significant expansion of addressable market, and a pipeline that is expected to boost both ARR and system sales in 2026, driving top-line revenue and earnings.
Kornit's recurring revenue stream from its all-inclusive click (AIC) business model and growing installed base is expected to increase meaningfully in 2025 and 2026, improving revenue predictability and supporting margin expansion due to high-margin consumables and services.
Heightened regulatory and customer focus on sustainability is driving apparel and footwear brands to adopt waterless, eco-friendly digital printing solutions, which positions Kornit favorably to capture market share from traditional, less sustainable competitors-supporting longer-term growth and gross margin stability.
Ongoing innovation, product launches (such as Apollo, Atlas MAX Plus), and targeted vertical/geographic expansion (including strategic partnerships and development deals with major global brands) are set to unlock new high-value markets, increasing potential revenues and enhancing operating leverage.

Kornit Digital Earnings and Revenue Growth

Kornit Digital Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Kornit Digital's revenue will grow by 6.8% annually over the next 3 years.
Analysts are not forecasting that Kornit Digital will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Kornit Digital's profit margin will increase from -5.4% to the average US Machinery industry of 9.9% in 3 years.
If Kornit Digital's profit margin were to converge on the industry average, you could expect earnings to reach $25.0 million (and earnings per share of $0.66) by about September 2028, up from $-11.3 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 48.5x on those 2028 earnings, up from -57.5x today. This future PE is greater than the current PE for the US Machinery industry at 24.0x.
Analysts expect the number of shares outstanding to decline by 5.13% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 10.02%, as per the Simply Wall St company report.

Kornit Digital Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Kornit's recurring revenue (ARR) growth and AIC model adoption are tracking below management expectations, suggesting that customer education and internal execution hurdles could delay the transition to a more stable, higher-margin business model, potentially weighing on revenue predictability and margin expansion in the near to medium term.
Consumable and service revenue declined year-over-year, with ink revenue specifically impacted by customer inventory destocking; if customers continue to improve inventory management or find alternatives (e.g., third-party inks), this could lead to persistently softer consumables growth and pressure gross margins.
Adoption of Kornit's new Apollo system and broader penetration into the traditional screen printing market are occurring at a slower pace than planned, due in part to long sales cycles, customer risk aversion, and the need for "lighthouse" reference accounts; this elongated transition risks pushing significant revenue growth further out, increasing dependence on near-term system sales and threatening overall earnings growth.
Gross margin erosion (down to 46.3% from 48.6% last year) was attributed to weaker consumables and upgrade sales, and, coupled with continued negative adjusted EBITDA margins, this trend-if not reversed-could signal sustained margin compression and challenges to achieving target net profitability.
Increased customer concentration (major strategic accounts driving a substantial portion of system sales and upgrades) exposes Kornit to revenue volatility and diminished pricing power should key clients delay investments, renegotiate terms, or shift to alternative production models, thereby undermining both top-line growth and earnings stability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $23.917 for Kornit Digital based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $28.5, and the most bearish reporting a price target of just $20.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $252.9 million, earnings will come to $25.0 million, and it would be trading on a PE ratio of 48.5x, assuming you use a discount rate of 10.0%.
Given the current share price of $14.47, the analyst price target of $23.92 is 39.5% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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