Barclays downgraded Penguin Solutions (PENG) to "Underweight" from "Equal Weight." The bank cited concerns over gross margins. Barclays maintained a $40 price target.
The downgrade reflects a shift in Penguin's business mix. Analyst Tom O'Malley noted the memory business is a larger revenue contributor. Higher pricing is pressuring profit margins.
Barclays noted optimism around Penguin's Advanced Computing division. The division has yet to materially impact results.