Stock Analysis

News Flash: 16 Analysts Think Cognex Corporation (NASDAQ:CGNX) Earnings Are Under Threat

  •  Updated
NasdaqGS:CGNX
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Today is shaping up negative for Cognex Corporation (NASDAQ:CGNX) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the consensus from 16 analysts covering Cognex is for revenues of US$975m in 2022, implying a definite 10% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to crater 26% to US$1.10 in the same period. Previously, the analysts had been modelling revenues of US$1.1b and earnings per share (EPS) of US$1.63 in 2022. Indeed, we can see that the analysts are a lot more bearish about Cognex's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Cognex

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NasdaqGS:CGNX Earnings and Revenue Growth August 8th 2022

The consensus price target fell 19% to US$52.19, with the weaker earnings outlook clearly leading analyst valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Cognex at US$75.00 per share, while the most bearish prices it at US$40.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 19% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 8.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cognex is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Cognex.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Cognex going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether Cognex is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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