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On Friday, Stifel analysts adjusted their outlook for Onto Innovation Inc. (NYSE: NYSE:ONTO), reducing the price target to $200 from the previous $250, while maintaining a Buy rating on the company’s shares. The revision comes after a series of meetings this week with Onto Innovation’s CEO, Mike Plisinski, and VP of Investor Relations, Sidney Ho. The discussions have affirmed Stifel’s earlier perspective that Onto’s growth in 2025 will be predominantly fueled by its wafer fabrication equipment (WFE)-oriented advanced nodes business, which is gaining traction in terms of customer, market, and product momentum. The company has demonstrated strong financial performance with 21% revenue growth over the last twelve months, according to InvestingPro data.
Despite the positive outlook for the advanced nodes sector, Onto is facing increased challenges in its advanced packaging and specialty business. The company is navigating through tougher customer comparisons and heightened competition, which, while highlighting the market’s attractiveness, presents additional obstacles. Nevertheless, Stifel analysts expect Onto Innovation to outperform overall industry growth in 2025, supported by strategies to both penetrate new market opportunities and defend its existing positions. The company maintains a strong financial foundation with a healthy current ratio of 8.69 and minimal debt, positioning it well for future growth opportunities.
The broader market sentiment, particularly within the technology sector, has shown signs of decline, with the S&P 500 Tech sector’s multiples decreasing by 20-25% since mid-February. This general downturn in sentiment has prompted Stifel to revisit and lower the price target for Onto Innovation. Despite the adjustment, analysts at Stifel believe that the recent market reset has adequately reflected the recalibrated growth expectations that were set at the beginning of the year.
At the new price target of $200, Onto Innovation’s shares are trading at approximately 16 times Stifel’s projected earnings per share (EPS) for the calendar year 2026, or 14 times when excluding cash. Currently trading at a P/E ratio of 31.55x, InvestingPro analysis suggests the stock is slightly undervalued based on its proprietary Fair Value calculations. Stifel’s analysts hold that, even with the revised price target, the current valuation still presents an attractive investment opportunity, leading them to sustain their Buy rating on Onto Innovation stock. For deeper insights into ONTO’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Onto Innovation Inc. reported better-than-expected financial results for the fourth quarter of 2024. The company posted an earnings per share (EPS) of $1.51, surpassing the forecast of $1.41, and recorded revenue of $264 million, exceeding the projected $259.29 million. This marks a 21% year-over-year increase in revenue, driven by strong performance in AI packaging and advanced metrology. Despite these positive results, Onto Innovation’s stock experienced a decline in after-hours trading. For the first quarter of 2025, the company provided revenue guidance between $260 million and $274 million, with a gross margin forecast of 54% to 56%.
Additionally, Cantor Fitzgerald maintained an Overweight rating on Onto Innovation, with a price target of $250.00. Analyst Matthew Prisco expressed confidence in the company’s growth prospects, particularly in the AI infrastructure sector. The analyst highlighted Onto Innovation’s potential for robust growth in the latter half of 2025 and into 2026. The company’s strategic goal is to increase its market share in the AI packaging market, where it currently holds an estimated 60% market share. Onto Innovation’s CEO, Mike Bircinski, emphasized AI as a multi-year growth driver, further underscoring the company’s commitment to leveraging opportunities in this expanding sector.
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