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Investment firm B. Riley upgraded semiconductor equipment company Cohu (NASDAQ:COHU) on Monday and tweaked its estimates on several other chip equipment companies after coming away positive from a recent semiconductor conference.
Cohu (COHU) shares rose more than 4% on Monday after analyst Craig Ellis boosted his rating to buy from neutral and added that there are a number of "substantive opportunities" and product gains the company is making in this down-cycle to position itself to see strong revenue acceleration and gross margin expansion when spending turns around.
Ellis also raised his per-share price target on Cohu (COHU) shares to $50 from $38, calling the stock "still cheap."
In addition, Ellis raised his per-share price target on several chip equipment companies. He raised his target on Axcelis Tech (ACLS) to $225 from $165, noting that the company could generate $1.3B in calendar 2024 sales as silicon carbide takes off.
He also raised his target on Applied Materials (AMAT) to $175 from $150, citing "an above industry" growth profile in 2023 and 2024 due to the new Vistera product platform, the coming EPIC Customer Collaboration Center and in-progress advanced architecture and packaging.
Others also seeing price target boosts include Camtek (CAMT), FormFactor (FORM), Ichor Holdings (ICHR), Kulicke and Soffa Industries (KLIC), Lam Research (LRCX) and Onto Innovation (ONTO) for a variety of reasons, including stabilizing demand in the sector.
"Our summary is that signs of a front- and back-end mid-C23 cyclical spending trough seemed broadly evident, signs of immediate order acceleration relatively sparse, yet optimism convincingly rising that solid [calendar 2024 and 2025 year-over-year] capex growth lies ahead while, in many cases, co-specifics are increasingly honed through the trough to accelerate growth and [gross margin] expansion when the spending inflection hits," Ellis wrote in an investor note.
Analysts are largely bullish on Cohu (COHU). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates COHU a BUY.