Needham has adjusted the price target for Ichor Holdings (NASDAQ: NASDAQ:), a company specializing in the delivery of critical subsystems for semiconductor capital equipment. The firm lowered its price target to $40 from the previous $44 while maintaining a Buy rating on the stock.
The revision follows Ichor Holdings’ second-quarter 2024 earnings report and third-quarter guidance, which aligned closely with market expectations. The company’s management expressed optimism for the fourth quarter of 2024, anticipating high single-digit percentage sequential growth.
This growth projection is based on increased demand for High Bandwidth (NASDAQ:) Memory (HBM) and standard Dynamic Random-Access Memory (DRAM).
Despite the positive outlook for the latter part of the year, the company’s management is cautious about the NAND market, to which Ichor is significantly exposed. They predict that the NAND recovery will commence in the middle of 2025.
In light of these factors, Needham remains positive about Ichor Holdings’ prospects leading up to the anticipated NAND recovery. The price target of $40 reflects 20 times the firm’s revised calendar year 2025 non-GAAP earnings per share estimate.
Ichor reported Q1 revenues of $201 million. The company has seen its share target raised by TD Cowen from $42.00 to $48.00, maintaining a Buy rating. The adjustment is based on the expected recovery in investments in NAND technology and the stabilization of gas panel inventory levels, suggesting a more stable demand moving forward.
Despite facing challenges such as limited engagement with semiconductor capital equipment customers in China and fluctuating demand for materials like Silicon Carbide (SiC), Ichor is poised for growth. TD Cowen projects that Ichor will outperform the wafer fabrication equipment (WFE) market growth rate, positioning it well for the upcoming calendar year 2025.
InvestingPro Insights
In the wake of Needham’s revised price target for Ichor Holdings (NASDAQ:ICHR), current metrics from InvestingPro paint a nuanced picture of the company’s financial health and stock performance. Notably, Ichor’s market capitalization stands at $939.31 million, reflecting its position in the market. However, the company’s P/E ratio is currently negative at -15.85, suggesting that it has been operating at a loss. This aligns with the InvestingPro Tip that Ichor has not been profitable over the last twelve months.
On the positive side, revenue for the last twelve months as of…
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