Tuesday – Loop Capital has initiated coverage on Penguin Solutions (NASDAQ:PENG) with a Buy rating, accompanied by a price target of $30.00. Currently trading at $19.73, the stock has shown significant volatility with a 52-week range of $14.87-$29.81.
The firm’s analysts see the company as a promising player in the generation artificial intelligence (Gen AI) sector, with significant potential in critical next-generation technology areas. According to InvestingPro data, analyst consensus remains strongly bullish with targets ranging from $22 to $27.
Penguin Solutions, which is scheduled to report its November quarter earnings per share (EPS) after the market closes on Wednesday, is viewed by Loop Capital as having a variety of growth drivers over the next one to two years. While not profitable in the last twelve months, InvestingPro analysis indicates strong financial health with a current ratio of 2.65 and liquid assets exceeding short-term obligations. These fundamentals support both advancement opportunities and special situation potential through a partnership with SK Telecom (NYSE:).
The $30.00 price target set by Loop Capital is based on a 12 times multiple of the over $2.50 EPS that analysts project Penguin Solutions could achieve on a run-rate basis by 2026. This valuation is also informed by the recent investment by SK Telecom (BCBA:), which acquired a 10% stake in Penguin Solutions at a price of $32.81 per share. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, with analysts forecasting EPS of $1.79 for FY2025.
Penguin Solutions is recognized for its involvement in the development of critical technologies that are expected to shape the future of the industry. With the backing of SK Telecom’s recent investment, the company is considered to be in a strong position to capitalize on upcoming market opportunities.
As markets anticipate the company’s earnings report on Wednesday, investor focus will likely be on Penguin Solutions’ financial performance and any strategic updates that could influence the stock’s trajectory, in line with Loop Capital’s positive outlook. For deeper insights into Penguin Solutions’ financials and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Penguin Solutions has been the focus of several analyst reports and company developments. Stifel reiterated their Buy rating on Penguin Solutions, despite reducing their price target to $27, based on the company’s forecasted 10% to 20% annual revenue growth for FY25. However, the company’s Q4 earnings and revenue fell short of expectations, reporting adjusted earnings per share of $0.37 and revenue of $311 million.
Penguin Solutions has expanded its OriginAI infrastructure, incorporating the latest GPU technology from NVIDIA (NASDAQ:) and AMD (NASDAQ:), as well as AI-optimized hardware from Dell Technologies (NYSE:). This move is expected to provide a wider range of architecture options for organizations looking to deploy AI infrastructure at scale.
Analysts from JMP Securities and Goldman Sachs issued a Market Outperform and Buy rating respectively, recognizing the company’s shift towards enterprise AI solutions. Despite a reduction in price targets, Stifel, Rosenblatt, and Needham maintained their Buy ratings on Penguin Solutions. For the fiscal year 2025, Penguin Solutions predicts an EPS of $1.50-$1.90 and a revenue of $260-290 million, suggesting a potential 15% year-over-year growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.