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Investing.com - BofA Securities downgraded Axcelis Technologies (NASDAQ:ACLS) from Neutral to Underperform on Monday, while raising its price target to $90.00 from $81.00. The stock, which has declined nearly 10% in the past week according to InvestingPro data, maintains strong fundamentals with a current ratio of 6.01 and minimal debt-to-equity of 0.07.
The downgrade comes despite BofA’s generally positive view of Axcelis’s proposed merger with Veeco Instruments (NASDAQ:VECO), which the firm believes will benefit from larger scale, new customer exposure, and potential revenue synergies. However, these benefits are expected primarily in 2027 and beyond, with limited near-term upside. InvestingPro analysis indicates the company currently trades below its Fair Value, with 6 analysts recently revising earnings estimates upward for the upcoming period.
BofA cited continued limited near-term recovery outlook for standalone Axcelis, particularly in its key silicon carbide power and mature node foundry/logic markets. The firm noted that current equipment market strength is being driven by AI/leading-edge logic and HBM memory, areas where Axcelis has little to no exposure.
Competition remains challenging for Axcelis, according to BofA, with Applied Materials continuing to gain share in ion implant and ongoing catch-up by local Chinese suppliers further pressuring the company’s position.
While BofA sees the proposed merger as accretive to pro-forma earnings per share with potential EPS of approximately $6 by 2027, the firm expressed concern that Axcelis’s current valuation may already incorporate much of this upside, leading to its preference for semiconductor equipment peers with greater exposure to AI and HBM markets.
In other recent news, Axcelis Technologies reported impressive financial results for the second quarter of 2025, with earnings per share of $1.13, surpassing the forecasted $0.71. The company’s revenue also exceeded expectations, reaching $195 million against an anticipated $185.94 million. In a significant development, Axcelis and Veeco Instruments announced a merger in an all-stock deal valued at approximately $4.4 billion, with Axcelis shareholders owning 58% of the combined entity. Additionally, Axcelis has entered into a Joint Development Program with GE Aerospace to develop advanced high-voltage power devices. Analyst firm DA Davidson responded to these positive outcomes by raising its price target for Axcelis to $90 from $75, maintaining a Buy rating. These recent developments reflect a positive outlook for Axcelis amid current semiconductor market conditions.
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