Cognex Acquires SUALAB To Enhance Deep Learning Solutions

Cognex (NASDAQ:CGNX) recently announced the acquisition of Seoul-based SUALAB, a developer of deep learning-based vision software. Although the financial terms of the acquisition have been kept under wraps, per a Pulse article the transaction price is estimated to be $168.6 million.

Deep learning allows Cognex to solve the most complex vision application operations in factories faster, easier and in a cost-effective manner. The addition of SUALAB’s Intellectual property and highly skillful engineering team, which specializes in deep learning, is expected to strengthen the company’s product portfolio.

The latest acquisition will help Cognex to reap benefits from strong prospects of the global deep learning system software market. Per a report from Market Research, the market is expected to witness CAGR of more than 41% between 2019 and 2025.

Strong Product Portfolio

Cognex offers a full range of inspection, guidance and identification solutions, which find application in a number of industries like automation equipment, automotive, logistics and consumer products to name a few.

Recently, Cognex announced the release of In-Sight Explorer software, which will enable the company to deliver higher operating speed and efficiency for smart factories. Further, the company announced the launch of its advanced and high-speed barcode reader, DataMan 370 that is used in factories and distribution centers around the world to eliminate production and shipping errors.

Apart from a solid product portfolio, Cognex’s continuous effort to gain access to newer technology through investments in research and development is expected to drive the top line in the future.

End-Market Softness to Hurt Growth

Lower spending by customers, particularly in the consumer electronics and automotive sector, is expected to hurt top-line growth in the near term. The contraction in the factory automation market in Europe is also a headwind.

Moreover, slowing China economy and sluggishness in industrial markets in other parts of Asia are major concerns.

Zacks Rank & Stocks to Consider

Currently, Cognex carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are Benefitfocus, Inc. (NASDAQ:BNFT) , Alteryx, Inc. (NYSE:AYX) and Cirrus Logic, Inc. (NASDAQ:CRUS) . Each of the stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings growth rate for Benefitfocus, Alteryx and Cirrus Logic is currently pegged at 20%, 17.6% and 15%, respectively.

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