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On Monday, Citi analysts upgraded Veeco Instruments Inc. (NASDAQ:VECO) stock from Neutral to Buy, setting a price target of $33.00. The decision comes as the firm anticipates that the company is entering a phase where its fundamentals are approaching a cyclical trough, suggesting a potential rebound.
The upgrade reflects Citi's positive outlook on Veeco's expanding Serviceable Available Market (SAM) and its gains in laser annealing and nanosecond annealing technologies. These areas are expected to benefit from the industry's transition to gate-all-around (GAA) transistors, backside power, and high bandwidth memory (HBM) technologies.
Citi's analysts are also optimistic about Veeco's growth in AI-related semiconductor revenue. They project that this segment will double its contribution to the company's total sales, increasing from 10% in 2024 to an anticipated 20% in 2025. The growth is believed to be primarily driven by the company's wet processing technology.
Despite a forecasted sharp decline in the data storage segment for 2025, analysts believe that the negative impact is largely accounted for in the current stock price. The upgrade by Citi indicates a confidence in Veeco's ability to navigate through the current market conditions and capitalize on emerging technology trends.
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