Expectations For Cognex Could Be Washed Out, Though Multiples Are Still Robust

Machine vision specialist Cognex (CGNX) is still looking a little bleary-eyed, as the company is absorbing a rare one-two bunch of serious deterioration in its two largest markets (autos and consumer electronics). While the revisions to near-term growth expectations have been painful, it increasingly looks as though the stage is being set for easier comps in 2020 and beyond, and although I have my doubts about the consumer electronics business, I think the auto and factory automation end-markets will recover (while logistics continues to grow nicely).

Cognex isn't dirt cheap, but it still remains a favored name in discussions of "factory of the future" stocks, and the company's machine vision capabilities make it a fairly rare asset in industrial automation. While I do think Cognex's primary end-markets aren't likely to get much worse from here, a broader sell-off in the market (or increased risk aversion) could still shrink the multiple further. On the other hand, I don't expect Cognex to ever trade at a particularly wide discount to long-term fair value, and I wouldn't advise getting too clever about trying to call a bottom here.

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Expectations For Cognex Could Be Washed Out, Though Multiples Are Still Robust