top of page
  • Writer's pictureAbacus Research

Cognex: It all comes down to the growth rate

Industrial automation is a megatrend. We are convinced of the long term attractiveness of Cognex business and growth opportunity over the next 5-10 years due to increasing automation and cheaper robots.

  • Our work shows that there is a high chance that we are at the beginning of a multi-year high growth cycle for Cognex products.

  • The main driver is falling cost of automation providing payback in 3 months to 1 year.

  • The complication lies in removing the volatile cyclical elements such as the Apple capex cycle which hit a high in 2017.

Our Position:

  • Q4 Earnings on 15th Feb will give a lot of insight into the underlying growth rate.

  • We think growth will not be a straight line, as Cognex makes one-off sales, this should provide opportunities in the stock.

  • At this point, we prefer to wait for growth expectations to come down to have a greater margin of safety.

Potential Upside: $93 (+35%): Structural change, 25% revenue growth

Downside: $42 (-38%): Cyclical revenues, but 15% revenue CAGR through the cycle.

Recent Posts

See All

Fortive: potential14% IRR

Fortive is a high quality business with an asset light model, high margins, high incremental margins and consistent FCF generation that is reinvested in M&A. Recent guidance for slow organic growth fo

Vertiv (VRT) - Datacentre play on AI theme

Vertiv is a leader in critical infrastructure for datacentres and a clear beneficiary of AI driven growth. AI tailwind for datacentres is only starting. To date, Vertiv has seen little to no impact fr

Palantir (PLTR)

The advent of LLM’s have changed Palantir's relationships with institutions – the commercial market is now open to what Palantir is selling. This is a significant change from one year ago. AIP bootcam


bottom of page