Needham & Company analyst James Ricchiuti lowered his price target on Cognex (NASDAQ: CGNX) to $40.00 (from $47.00) following Q3 results but maintained a Buy raitng.

Ricchiuti commented, "CGNX reported Q3 EPS after the close that, excluding a gain related to the sale of the Surface Inspection Systems Division (SISD), were well above expectations. Revs were in line with expectations and at the upper end of guidance, though down sharply y/o/y and q/o/q, reflecting the absence of significant sales to Apple in the comparable quarters. Mgmt offered a cautious Q4 outlook, citing slower demand from customers in Asia, notably China, and in the broader automotive market. CGNX guided for Q4 revenue to be down 10%-13% sequentially, well below Street expectations. We are lowering our numbers meaningfully for Q4 and 2016. We believe CGNX is well positioned to see a pickup in larger deals in 2016, which we have not assumed in our estimates in the early part of the year. Maintain Buy rating."

The firm is cutting Q4 EPS estimate to $0.17 from $0.25 on revenues of $96M. They are lowering o2016 EPS estimate to $1.16 ($1.30 non-GAAP) from $1.42 previously, on revenues of $464M, compared with prior $516M estimate.

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Shares of Cognex closed at $38.00 yesterday.