Needham has increased its price target for Penguin Solutions (PENG, Financial) from $27 to $30 while maintaining a Buy rating on the stock. This decision follows insightful discussions with CFO Nate Olmstead, where Needham gained deeper insight into the company's partnership with SK Telecom, expansion in the memory business targeting the "AItail" market, and developments concerning the Artesyn EoL. These factors contribute to Needham's positive outlook on PENG's future prospects.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Penguin Solutions Inc (PENG, Financial) is $32.25 with a high estimate of $35.00 and a low estimate of $27.00. The average target implies an upside of 31.23% from the current price of $24.58. More detailed estimate data can be found on the Penguin Solutions Inc (PENG) Forecast page.
Based on the consensus recommendation from 4 brokerage firms, Penguin Solutions Inc's (PENG, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Penguin Solutions Inc (PENG, Financial) in one year is $23.00, suggesting a downside of 6.41% from the current price of $24.575. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Penguin Solutions Inc (PENG) Summary page.
PENG Key Business Developments
Release Date: July 08, 2025
- Revenue: $324 million, up 7.9% year over year.
- Non-GAAP Gross Margin: 31.7%.
- Non-GAAP Diluted Earnings Per Share: $0.47, up 25% year over year.
- Non-GAAP Operating Income: $38 million, up 15% year over year.
- Non-GAAP Operating Margin: 11.9%.
- Advanced Computing Revenue: $132 million, down 9% year over year.
- Integrated Memory Revenue: $130 million, up 42% year over year.
- Optimized LED Revenue: $62 million, down 4% year over year.
- Cash and Cash Equivalents: $736 million at the end of the third quarter.
- Adjusted EBITDA: $45 million, up 15% year over year.
- Inventory: $184 million, with days of inventory at 36 days.
- Cash Flow from Operating Activities: $97 million for the third quarter.
- Share Buyback: $30 million spent to repurchase 1.8 million shares in the third quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Penguin Solutions Inc (PENG, Financial) reported a 7.9% increase in revenue for Q3 2025, reaching $324 million compared to the same quarter last year.
- Non-GAAP diluted earnings per share increased by 25% year over year, reaching $0.47.
- The company achieved a non-GAAP operating income of $38 million, up 15% from the prior year.
- Penguin Solutions Inc (PENG) is seeing early-stage enterprise AI adoption across various vertical markets, indicating potential future growth.
- The company has raised its full-year non-GAAP diluted earnings per share outlook from $1.60 to $1.80 per share at the midpoint, reflecting confidence in its financial performance.
Negative Points
- Advanced computing revenue for Q3 2025 was $132 million, down compared to the prior quarter due to the timing of a major deployment.
- Non-GAAP gross margin for the third quarter was 31.7%, down 0.6 percentage points year over year.
- The company's services net sales totaled $66 million, down 3% versus Q3 last year.
- Optimized LED revenue was constrained due to increased costs and uncertainty related to tariffs on products shipped from the Weizhou China facility.
- The company faces ongoing supply chain constraints, impacting the ramp-up of existing and new customer projects.
