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Penguin Solutions: Buy Rating Affirmed Amid Growth Potential and Strategic Partnerships

Penguin Solutions: Buy Rating Affirmed Amid Growth Potential and Strategic Partnerships

Nick Doyle, an analyst from Needham, maintained the Buy rating on Penguin Solutions. The associated price target is $27.00.

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Nick Doyle has given his Buy rating due to a combination of factors that highlight Penguin Solutions’ potential for growth. Despite missing third-quarter revenue expectations in their Advanced Compute segment, the company has demonstrated strong operational and financial management, which is expected to result in higher earnings per share for fiscal years 2025 and 2026. This positive outlook is further supported by the company’s performance in the memory sector, which benefits from increased AI demand from major clients such as IBM and Cisco.
Additionally, the disclosure of a data center partnership with SK Telecom suggests significant momentum, and the introduction of a new BioTech vertical alongside a robust year-to-date pipeline reinforces confidence in the company’s future prospects. Although there are adjustments to fiscal year 2026 gross margin and operating expenses, the overall impact is mitigated by a reduction in net interest income. Consequently, the price target remains at $27, reflecting a valuation based on approximately 13 times the next-generation earnings.

In another report released yesterday, Barclays also maintained a Buy rating on the stock with a $23.00 price target.

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