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On Thursday, KeyBanc Capital Markets adjusted its outlook on Entegris Inc (NASDAQ:ENTG), reducing the price target from $130.00 to $117.00, while maintaining an Overweight rating on the stock. The adjustment follows Entegris’s first-quarter update, which KeyBanc analysts found disappointing in terms of portfolio growth and an expected revenue loss in China. Currently trading at $78.39, the company maintains a market capitalization of $11.86 billion and trades at a P/E ratio of 40.71. According to InvestingPro analysis, the stock is currently fairly valued based on its comprehensive Fair Value model.
Entegris, a supplier to the semiconductor industry, is anticipated to experience a temporary setback with a $50 million revenue loss in China during the second quarter of 2025. This projection is based on recent restrictions and tariffs that have more significantly impacted Entegris compared to its competitors, due to its 25% exposure to industry capital expenditures and a 1% sales headwind from earlier sales restrictions in China. Despite these challenges, InvestingPro data shows the company maintains strong financial health with a current ratio of 3.08, indicating robust liquidity to weather temporary setbacks.
Despite a bullish sentiment prior to the first-quarter results, influenced by strong demand reports from industry peers, Entegris’s organic sales growth has been revised down to 3% by KeyBanc. The firm contends that while flat sales growth in the first half of 2025 could be justifiable for Entegris, it might not be sufficient to generate investor enthusiasm. This sentiment is reflected in the stock’s performance, with InvestingPro data showing a YTD decline of 20.68%, though revenue growth is forecast to reach 5% in FY2025.
The analyst from KeyBanc noted that while the start of 2025 has been slow for Entegris, they expect growth to accelerate in the second half of the year. The lowered earnings forecast is the primary reason for the reduced price target of $117.00. Despite the near-term challenges, KeyBanc’s Overweight rating indicates a belief in the company’s long-term potential.
Entegris’s stock performance and investor sentiment in the coming months will likely be influenced by its ability to navigate the temporary challenges in China and capitalize on the anticipated growth in the latter part of the year.
In other recent news, Entegris Inc. reported its financial results for the first quarter of 2025, showing a slight miss in both earnings per share (EPS) and revenue compared to analyst forecasts. The company posted an EPS of $0.67, falling short of the expected $0.68, and revenue reached $770.3 million, below the forecasted $791.6 million. Entegris demonstrated a 5% year-on-year revenue growth, excluding divestitures, with gross margins hitting 46.1%. The company projects revenue for Q2 2025 between $735 million and $775 million, with potential impacts of up to $50 million due to China tariffs. Despite these challenges, the Advanced Packaging (NYSE:PKG) business doubled and is expected to grow over 25% in 2025. Analysts from Deutsche Bank (ETR:DBKGn) and Needham inquired about the impact of China tariffs and the company’s strategies to mitigate these effects. Entegris executives assured efforts are underway to qualify alternative manufacturing sites and optimize working capital.
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