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On Tuesday, Stifel analysts adjusted their outlook for Ichor Holdings (NASDAQ:ICHR), a company specializing in the delivery of critical subsystems for semiconductor capital equipment. The firm’s analyst Brian Chin reduced the price target on Ichor stock to $28 from the previous $35 while sustaining a Buy rating on the shares. According to InvestingPro data, the stock has seen significant pressure, falling nearly 36% over the past six months, with current analyst targets ranging from $23 to $50.
Ichor Holdings disclosed its first-quarter results on Monday, after the market closed. The company met revenue expectations but fell short on earnings, with gross margin (GM) expansion not reaching anticipated levels. InvestingPro data reveals the company’s current gross profit margin stands at just 12.28%, confirming the challenges in this area. The process of transitioning to more internally-supplied components is progressing more slowly than management had predicted, leading to a revised expectation for a more gradual GM expansion. InvestingPro subscribers have access to 10+ additional key insights about Ichor’s financial health and growth prospects.
Management acknowledged the challenges they faced with these learning curve issues and expressed commitment to heightened vigilance and improved execution going forward. In terms of revenue forecasts, Ichor has adopted a cautious stance, guiding for a 4% quarter-over-quarter decrease in the second quarter ending in June and a flat performance for the second half of the year. This contrasts with Stifel’s previous model, which had estimated flat quarter-over-quarter revenue and a 3% increase in the latter half of the year. The revised outlook takes into account certain areas of weakness, such as lithography, silicon carbide, and non-semiconductor segments, while reaffirming strength in the etch and deposition markets.
Chin noted that Ichor’s revenue guidance aligns with the broader trends observed among its peers. Despite the less than favorable update on gross margins, which Chin believes is more a result of internal issues than external factors like tariffs, Stifel remains optimistic about the company’s potential for improved execution. The analyst pointed out that at the current valuation, which is 2.2 times tangible book value and 25% below the previous trough levels, the risk-reward balance justifies maintaining a Buy rating on the stock, even with a lowered price target. InvestingPro analysis indicates the stock is currently undervalued, with a Price/Book ratio of 1.02 and analysts forecasting profitability this year. For comprehensive analysis of Ichor’s valuation and future prospects, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Ichor Holdings reported its first-quarter 2025 earnings, which fell short of analyst expectations. The company posted an earnings per share (EPS) of $0.12, missing the anticipated $0.24, while revenue reached $244.47 million, slightly below the expected $244.95 million. Gross margins also came in lower than expected at 12.4%, compared to the forecasted 14.5%. Despite these challenges, Ichor Holdings achieved a 21% year-over-year revenue growth and a 5% sequential increase. The company is continuing its focus on expanding global operations, including plans for a new facility in Malaysia.
Additionally, DA Davidson recently adjusted its outlook for Ichor Holdings by lowering the price target to $45 from $50, though it maintained a Buy rating. The revision reflects uncertainties in the semiconductor market, including tariff and export control issues. Despite short-term challenges, DA Davidson remains optimistic about Ichor Holdings’ long-term prospects, citing potential margin expansion from increased internal component sourcing. The firm anticipates this proportion to grow from 10% in 2023 to 30% by the end of 2025.
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