Penguin Solutions Q3 Earnings Beat Expectations, Advanced Computing Revenue Falls Short

Penguin Solutions reported Q3 earnings that topped expectations, raising its full-year earnings outlook. However, revenues came in short of expectations, disappointing investors looking for upside in Advanced Computing revenue trends. Analysts reiterated their Neutral and Buy ratings, but revised price targets. The company's shares surged 7.2% to $22.72.

Penguin Solutions (PENG) reported its third-quarter earnings on Tuesday, with adjusted earnings per share (EPS) of 47 cents, exceeding market expectations of 33 cents per share. The company's quarterly sales came in at $324.25 million, missing expectations of $328.81 million. Despite the revenue shortfall, Penguin Solutions raised its full-year EPS guidance from $1.50 to $1.70 to $1.75 to $1.85 [2].

The company's shares gained 6% to trade at $22.45 on Wednesday, following the earnings announcement. Analysts at Goldman Sachs, JP Morgan, JMP Securities, and Needham revised their price targets on Penguin Solutions following the earnings release. Goldman Sachs analyst Michael Ng raised the price target to $25 from $22.5, while JP Morgan's Samik Chatterjee increased his target to $21 from $18. JMP Securities analyst Rustam Kanga maintained his $26 price target, and Needham's Quinn Bolton kept his at $27 [2].

Penguin Solutions' stock price surged 7.2% to $22.72, following the earnings report. However, the company's advanced computing sales declined to $132.5 million from $145 million in the prior-year period, contributing to the revenue shortfall. The constrained supply chain and macroeconomic environment are impacting Penguin's ability to ramp existing and new customer projects, according to Chief Financial Officer Nate Olmstead [3].

For fiscal year 2025, Penguin Solutions anticipates adjusted EPS to be in a range of $1.75 to $1.85, with sales expected to grow 17% at the midpoint on an annual basis. The company remains focused on developing its AI software and services capabilities, expanding go-to-market resources, and driving long-term value for shareholders [4].

References:
[1] https://www.benzinga.com/quote/PENG
[2] https://www.benzinga.com/analyst-stock-ratings/price-target/25/07/46327559/these-analysts-increase-their-forecasts-on-penguin-solutions-after-better-than-expected-q3-earnings
[3] https://www.marketwatch.com/story/penguin-solutions-shares-down-on-lower-advanced-computing-sales-98097776
[4] https://finance.yahoo.com/news/penguin-solutions-fiscal-third-quarter-103116857.html