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On Monday, B.Riley analysts reduced their outlook on Axcelis Technologies stock (NASDAQ:ACLS), downgrading the rating from Buy to Neutral and slashing the price target from $80 to $50. The adjustment reflects concerns over increased capacity spending risks and potential cost pressures due to China tariffs. The stock, currently trading at $44.78, has experienced significant pressure, falling over 52% in the past year. According to InvestingPro analysis, the company maintains strong fundamentals with a "GREAT" financial health score, suggesting potential resilience despite market challenges. Despite anticipating results for the first quarter of 2025 and guidance for the second quarter to align with expectations, supported by a strong backlog of $645 million recorded in the fourth quarter of 2024, the analysts expressed caution regarding the latter half of 2025 and the outlook for 2026.
The revised price target represents a significant decrease from the previous $100 target, indicating a more cautious stance on the company’s intermediate-term prospects. The analysts at B.Riley highlighted the uncertainty surrounding Axcelis Technologies’ future performance, particularly in light of the current geopolitical and economic environment which could impact the cost of goods sold (COGS) through potential tariffs. Despite these concerns, InvestingPro’s Fair Value analysis suggests the stock may be undervalued, with the company maintaining strong fundamentals including a healthy current ratio of 5.41 and minimal debt-to-equity of just 0.07.
In a statement, the analysts explained their decision, noting, "We expect in-line 1Q25 results and 2Q25 guidance aided by 4Q24’s $645M backlog. Yet, on now-elevated capacity spending risk, we cut 2H25 and 2026 estimates and fear China tariff COGS risk." They further elaborated on the change in their price target and rating, stating, "Reflecting a more uncertain intermediate-term view, our PT falls from $100 to $50 and rating from Buy to Neutral, and while it feels like basement window jumping versus LT value, it leaves an opportunity to become more positive when fundamentals inflect."
This downgrade by B.Riley signals a shift in their perspective on Axcelis Technologies, as they now adopt a more neutral position on the stock. The analysts suggest that they may revisit their stance if the company’s fundamentals show signs of improvement in the future. For now, they seem to be taking a step back, awaiting clearer indicators of Axcelis’s financial trajectory amidst the challenges posed by external economic factors. The overall analyst consensus remains cautiously optimistic, with targets ranging from $56 to $100. Discover more detailed insights and 17 additional ProTips for ACLS with a subscription to InvestingPro, including comprehensive analysis of the company’s growth prospects and financial health metrics.
In other recent news, Axcelis Technologies reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of $1.54 and revenue of $252.4 million, surpassing the consensus forecast of $244.97 million. However, the company provided disappointing guidance for the first quarter of 2025, forecasting earnings per share of approximately $0.38 on revenue of $185 million, which fell short of analyst projections of $1.02 EPS and $221.6 million in revenue. Additionally, Axcelis announced an increase in its share repurchase authorization by $100 million, bringing the total to $215 million, reflecting a strong cash position and a commitment to enhancing shareholder value.
Despite the earnings beat, analysts from Benchmark maintained a Hold rating on Axcelis, noting a weaker performance outlook for the March quarter and projecting lower sales in 2025. DA Davidson adjusted its price target for Axcelis shares to $100 from $125, while maintaining a Buy rating, citing an industry slowdown and increased operating expenses as factors impacting near-term financial performance. The company’s book-to-bill ratio dropped to 0.33, and backlog saw a significant year-over-year reduction of 46%, leading to expectations of lower sales in 2025. However, analysts anticipate a slight sales increase in the latter half of 2025, with a potential rebound not expected until 2026.
Axcelis is also expected to face subdued business activity in its key mainstream markets over the next several quarters, though potential new opportunities in Advanced Logic and expansion into Japan could drive future growth. The company’s financial health and future outlook remain closely watched by investors amid these developments.
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