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Investing.com - Needham has raised its price target on Penguin Solutions (NASDAQ:PENG) to $30.00 from $27.00 while maintaining a Buy rating on the stock. According to InvestingPro data, analysts are generally bullish on PENG, with targets ranging from $23 to $35, and the stock has shown strong momentum with a 28% gain year-to-date.
The price target increase follows virtual investor meetings that Needham analyst Nick Doyle held with Penguin Solutions CFO Nate Olmstead after the company’s recent earnings report.
Needham gained better clarity on Penguin’s relationship with SK Telecom (NYSE:SKM), its memory business expansion into the "AI tail" (CXL and OMA), and Artesyn end-of-life developments, according to the research note.
The firm believes Penguin Solutions is "well positioned for Enterprise AI demand" as the company continues its transformation from a holding company to an "operating company focused on advanced compute."
Needham’s valuation increase reflects a multiple expansion to approximately 14 times the firm’s unchanged fiscal year 2026 EPS estimate of $2.20, though it noted that first-half fiscal 2026 estimates "now seem conservative" given SK Telecom contributions are likely to be front-loaded.
In other recent news, Penguin Solutions reported its fiscal third-quarter 2025 earnings, which exceeded analyst expectations. The company posted adjusted earnings per share of $0.47, surpassing the consensus estimate of $0.33. However, revenue for the quarter was $324 million, falling short of the anticipated $330.79 million, though it still represented a 7.9% year-over-year increase. The Integrated Memory segment of Penguin Solutions generated $130.1 million in revenue, which exceeded expectations and marked a 42% increase compared to the previous year.
Loop Capital responded to these results by raising its price target for Penguin Solutions to $35, maintaining a Buy rating. They highlighted the company’s progress in commercial AI adoption, with five new customer acquisitions this quarter, including a notable deal with SK Group. Citizens JMP also reiterated a Market Outperform rating with a $26 price target, despite the revenue miss. These developments reflect ongoing interest and positive sentiment among analysts regarding Penguin Solutions’ future prospects.
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