Onto Innovation stock rating reiterated as Buy by Benchmark

Investing.com - Benchmark has reiterated its Buy rating on Onto Innovation Inc. (NYSE:ONTO), according to a research note released Thursday. The semiconductor equipment manufacturer, currently trading near $98, is showing signs of being undervalued according to InvestingPro analysis, with analyst price targets ranging up to $190.

The research firm acknowledged that Onto Innovation has experienced some market share loss to KLA (NASDAQ:KLAC) in the defect analysis segment, which has negatively impacted ONTO’s share price. Despite the recent 54% decline over six months, the company maintains strong fundamentals with a healthy 53% gross margin and minimal debt on its balance sheet.

Despite these challenges, Benchmark highlighted that Onto Innovation has introduced a new Gen 5 Dragonfly tool designed to measure smaller defects, which are particularly important to the company’s AI customers.

According to Benchmark, Onto Innovation plans to ship a beta version of this new tool by mid-2025, with a full production ramp expected in 2026.

The research note was authored by Benchmark analyst Mark Miller, who maintained his positive outlook on the semiconductor equipment manufacturer despite recent competitive pressures.

In other recent news, Onto Innovation Inc. has announced a significant acquisition of Semilab International’s materials analysis business for approximately $545 million. This transaction, which includes $475 million in cash and shares of Onto Innovation stock, is expected to close in the second half of 2025, pending regulatory approvals. The acquisition is projected to generate about $130 million in revenue by 2025 and is anticipated to immediately enhance Onto Innovation’s gross and operating margins. Stifel has maintained its Hold rating on Onto Innovation’s stock with a $117 price target, evaluating the strategic implications of this acquisition for the company. Meanwhile, Benchmark reiterated its buy rating with a $190 price target, expecting a rebound in Onto Innovation’s performance by the fourth quarter of 2025. Additionally, Onto Innovation has appointed Brian Roberts as its new Chief Financial Officer, following his tenure at Sensata Technologies. The company also named Shirley Chen as the new senior vice president of customer success, succeeding Srini Vedula. These leadership changes are part of Onto Innovation’s efforts to strengthen its executive team amidst its ongoing strategic developments.

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