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Cognex (NASDAQ:CGNX) shares gave up 2% Tuesday after Cowen analyst Joseph Giordino cut his rating on the manufacturing automation technology company on expectations that revenue will decline next year.

Giordino took down his rating on Cognex (CGNX) to market perform, or neutral, from outperform, and trimmed his price target on the stock to $50 a share from $55. Giordino said that “organic growth” will likely be difficult for Cognex (CGNX) to achieve next year, as the company faces challenges in its two main business lines, logistics and consumer electronics.

For Cognex’s (CGNX) logistics business, Giordino estimates sales will drop 15% year from 2021, and another 17.5% on a year-over-year basis in 2023. Giordino said the decline is likely being led by Amazon (AMZN), Cognex’s (CGNX) biggest customer, cutting its business dealings with the company.

With regards to consumer electronics, Giordino said Cognex (CGNX) expects low double-digit sales growth this year, due to what he said is expected to be “slightly higher unit production at Apple” and manufacturers shifting some of their production from China to other areas.

Wall Street analysts have a consensus buy rating on Cognex’s (CGNX) stock, while Seeking Alpha authors give the stock a rating of hold. Seeking Alpha’s quant system, which typically outperforms the stock market, agree with Seeking Alpha’s authors and views Cognex (CGNX) shares are worthy of a hold rating.


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