Penguin Solutions Posts Strong Earnings, But Advanced Computing Faces Setback

In a market still trying to find its footing after the turbulence of the past few years, shares of Penguin Solutions (NASDAQ:PENG) surged in early trading on Wednesday following the company's announcement of strong fiscal third-quarter earnings.

The announcement came amid an exciting earnings season. Here are some key analyst takeaways.

JPMorgan On Penguin Solutions

Analyst Samik Chatterjee reiterated a Neutral rating, while raising the price target from $18 to $21.

Penguin Solutions reported its earnings for the fiscal third quarter that topped expectations and raised its full-year earnings outlook, Chatterjee said in a note. He added, however, that the earnings upside was primarily due to cost discipline and one-time events.

Revenues came in short of expectations, disappointing investors looking for upside in Advanced Computing revenue trends, the analyst stated. "Modestly softer than expected revenues in Advanced Computing is led by lumpiness of revenues and timing, while the upside to demand drivers in Memory are expected to be more sustainable in the medium term by the company," he further wrote.

Check out other analyst stock ratings.

Rosenblatt Securities On Penguin Solutions

Analyst Kevin Cassidy reaffirmed a Buy rating and price target of $27.

Penguin Solutions reported revenue of $324 million, down sequentially and coming in below the consensus of $328 million, Cassidy said. Management guided to revenue growth of 17% or minus 2% for the full year, he added.

The company reiterated Advanced Computing revenue growth of 15%-25%, while raising the lower end of Integrated Memory revenue growth from 20%-30% to 25%-30%, the analyst stated. "Penguin Solutions also gained a new customer through its collaboration with SK Telecom (NYSE:SKM)," he further wrote.

Needham On Penguin Solutions

Analyst Nick Doyle maintained a Buy rating and price target of $27.

Memory continued to outperform, with revenues from the segment growing 24% sequentially to $130 million, "driven by strong demand across Computing, Networking, and Telecom verticals," Doyle said. Advanced Computing revenues contracted by 34% sequentially to $132.5 million, "as the prior quarter benefited from a major hyperscale deployment that did not repeat," he added.

"However, five new customer bookings (including a new BioTech vertical) and a growing pipeline YTD give us confidence in out quarter estimates," the analyst further wrote.

PENG Price Action: Shares of Penguin Solutions had risen by 7.2% to $22.72 at the time of publication on Wednesday.

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