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Investing.com - BofA Securities downgraded Camtek Ltd (NASDAQ:CAMT) from Buy to Neutral on Wednesday, while raising its price target to $95 from $80, citing concerns about decelerating growth despite the company’s strong position in inspection and metrology markets. According to InvestingPro data, Camtek maintains excellent financial health with a "GREAT" overall score, supported by strong cash flows and a solid balance sheet.
The semiconductor equipment maker reported second-quarter sales and earnings that exceeded analyst expectations by 2%, with third-quarter revenue guidance slightly above consensus estimates. BofA acknowledged Camtek’s impressive execution in scaling revenue approximately threefold over five years to about $500 million expected in 2025. This growth trajectory is evidenced by the company’s robust 32.6% revenue growth over the last twelve months, reaching $451 million. InvestingPro analysis reveals 12 additional key insights about Camtek’s growth potential and market position.
Despite these strengths, BofA highlighted several concerns, including overall sales growth deceleration from 40% year-over-year in Q3 2024 to an estimated 11% in Q3 2025. The firm noted that heavy investments in high-bandwidth memory (HBM) and chiplets that drove growth in 2023-2024 have plateaued heading into 2025. InvestingPro’s comprehensive analysis indicates that while growth may be moderating, Camtek maintains strong profitability with a 50.1% gross margin and healthy returns on equity of 25%.
BofA also pointed out that year-to-date earnings estimate revisions for 2025-2026 have remained essentially flat, suggesting the business may be entering a steadier but structurally slower growth phase. The firm expressed concern that Camtek’s new Hawk and G5 tools already contribute approximately 30% of 2025 estimated sales, limiting near-term incremental growth.
Additional factors in the downgrade included potential intensified competition during technical transitions like HBM4, where KLA Corp has expressed confidence in taking market share, and gross margins that remain range-bound between 51.5% and 52.5%, below mid-sized process control peers that achieve mid-50% to 60% margins.
In other recent news, Camtek Ltd. reported record second-quarter revenue of $123.3 million, surpassing analyst expectations of $121.57 million. The company’s adjusted earnings per share stood at $0.79, aligning with analyst projections. Revenue grew by 20% compared to the same quarter last year, while Camtek achieved a non-GAAP gross margin of 51.9% and a non-GAAP operating income of $37.4 million, marking a 21% increase from the previous year. In addition to these earnings results, Evercore ISI has raised its price target for Camtek to $100, maintaining an Outperform rating, citing the company’s strong position in advanced packaging technology transitions. Similarly, Jefferies increased its price target to $105, highlighting growth in high-performance computing (HPC) and noting that CoWoS technology now accounts for over half of Camtek’s HPC business. Both firms maintain positive ratings, with Jefferies emphasizing the impact of CoWoS-like sales to OSATs on growth. These developments reflect Camtek’s strategic positioning in the semiconductor equipment market.
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