Shares of Penguin Solutions Inc (NASDAQ:PENG) climbed in early trading on Wednesday after the company released an upbeat third-quarter report.
Here are some key analyst takeaways:
- Needham analyst Matthew Calitri maintained a Buy rating and raised the price target from $60 to $80.
- Rosenblatt Securities analyst Sajal Dogra reiterated a Buy rating and raised the price target from $75 to $80.
Check out other analyst stock ratings.
Needham: Penguin’s AI-driven sales grew 104% year-on-year. The company also raised its fiscal 2026 total revenue growth guidance to 22% +/- 2%, from its earlier projection of 12% +/- 5%.
Calitri said in a note that all three underlying segments contributed to the improved outlook:
- Advanced Computing is expected to decline 15%-20%, versus prior expectation of 15%-25%
- Integrated Memory is projected to grow 90%-95%, compared to previous outlook of 65%-75%
- Optimized LED is forecasted to decline by 5%, versus the prior expectation of 5%-15%
Management also raised its full-year non-GAAP earnings guidance to $2.60 +/- 5 cents per share, from $2.15 +/- 15 cents, with the revenue outperformance flowing to the bottom line, he stated.
"The company also issued preliminary FY27 guidance calling for 30% yr-yr Revenue and Non-GAAP EPS growth, demonstrating management’s belief that it is in the early stages of a significant, long-term, profitable growth opportunity," Calitri further wrote.
Rosenblatt Securities: Stronger-than-expected memory margins drove the upside, "as favorable pricing more than offset a higher hardware mix that pressured Advanced Computing margins," Dogra said. The company’s AI revenues doubled in the quarter and now represents 74% of total revenues, he added.
Management guided to fiscal 2027 revenues and earnings of $2.19 billion and $3.41 per share, significantly above consensus of $1.85 billion and $2.81 per share, respectively, the analyst stated. "What began as 6% FY26 revenue growth guidance has now progressed to 22% Y/Y, with FY27 expected to accelerate further to roughly 30% growth," he further wrote.
With the growing adoption of agentic AI workloads by enterprises, both the Memory and Advanced Computing segments "are positioned to benefit from a multi-year enterprise AI infrastructure cycle," Dogra noted.
PENG Price Action: Shares of Penguin Solutions rose 19.12% to $74.70 at the time of publication on Wednesday.
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