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On Thursday, Tower Semiconductor (NASDAQ:TSEM) stock maintained its Buy rating with a steady price target of $60, as affirmed by Benchmark analysts. The company’s first-quarter performance aligned with its forecast, showcasing a year-over-year revenue increase of 9% to $358.2 million, and a 6% rise from the previous quarter. Tower Semiconductor’s earnings per share (EPS) of $0.45 surpassed both Benchmark’s prediction and the consensus by $0.07, driven by robust expense management and higher interest income on its growing cash reserves. According to InvestingPro data, the company maintains strong financial health with a current ratio of 6.93 and holds more cash than debt on its balance sheet, supporting its operational flexibility.
The semiconductor manufacturer, known for its high booking visibility, has reported that its first-quarter bookings were already secured in previous periods. Tower Semiconductor’s strong quarter was bolstered by its RF Infrastructure business, which is leveraged to AI Data Centers, and a new partnership with Qorvo (NASDAQ:QRVO) for Apple (NASDAQ:AAPL)’s Envelope Tracking Power Management design associated with Apple’s new internally developed baseband.
Looking ahead, Tower Semiconductor has guided second-quarter revenues to reach $372 million, slightly above Benchmark’s estimate and the consensus of $371 million. While the company has not provided specific EPS guidance for the second quarter, Benchmark anticipates an EPS of $0.45, which would be $0.02 higher than the consensus. Tower Semiconductor also reiterated its previous full-year 2025 forecast, expecting revenue growth both annually and sequentially each quarter for the remainder of the year, with a significant acceleration anticipated in the latter half.
Benchmark’s enthusiasm for Tower Semiconductor’s prospects is underpinned by several factors. The company is poised to benefit from what is seen as the early stages of the next industry upcycle. Additionally, Tower’s increasing involvement in AI Data Center growth, its substantial new business with Apple, and an appealing valuation at approximately 16 times forward estimates support the Buy rating and $60 price target, which equates to 23.4 times Benchmark’s maintained full-year 2026 EPS estimate of $2.57.
In other recent news, Tower Semiconductor reported first-quarter earnings that did not meet analyst expectations, with adjusted earnings per share at $0.45, slightly below the anticipated $0.46. However, the company achieved revenue of $358.17 million, surpassing the consensus estimate of $355.54 million and marking a 9% year-over-year growth. Tower Semiconductor has projected second-quarter revenue to be around $372 million, plus or minus 5%, indicating an expected 6% year-over-year growth. The company continues to see record revenue in its RF infrastructure sector, including technologies like SiPho and SiGe, and aims for further growth in these areas throughout the year. Despite higher revenue, the gross profit for the first quarter remained flat at $73 million due to fixed costs associated with its new 300mm Agrate facility. Operating profit experienced a slight decline to $33 million from $34 million in the same quarter last year, while net profit decreased to $40 million from $45 million, partly due to the absence of a previous non-recurring tax benefit. Tower Semiconductor’s corporate credit rating of "ilAA" with a stable outlook was maintained by Standard & Poor’s Maalot. The company’s shares fell by 2.1% as investors focused on the earnings miss despite the positive revenue results and growth projections.
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