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Investing.com - Stifel has reduced its price target on Ichor Holdings (NASDAQ:ICHR) to $25.00 from $28.00 while maintaining a Buy rating ahead of the company’s second-quarter earnings report. Currently trading at $19.84, the stock appears undervalued according to InvestingPro analysis, with analyst targets ranging from $25 to $45.
The semiconductor equipment manufacturer is scheduled to release its Q2 results on Monday after market close. Stifel expects in-line revenue but projects earnings per share toward the lower end of guidance, modeling gross margin at 13.0%, below the midpoint of Ichor’s 12.5-14.0% range. This aligns with InvestingPro data showing current gross profit margins at 12.34%, with 7 analysts recently revising their earnings expectations downward.
Stifel noted that Ichor management acknowledged learning curve issues during the previous earnings call as the company ramps up internal component supply, which has delayed planned gross margin improvements. While hopeful for benefits in the second half of the year, Stifel has taken a conservative approach by modeling below Ichor’s 15.0-16.0% target range.
The firm’s third-quarter revenue and EPS estimates are in line or slightly below consensus. Stifel anticipates semiconductor equipment OEM shipments will plateau in the second half of 2023, modeling Ichor’s revenue to remain flat half-over-half.
Despite lowering 2026 estimates to reflect a more moderate baseline wafer fabrication equipment growth rate, Stifel remains optimistic that Ichor’s etch and deposition business, which is leveraged to Lam Research (NASDAQ:LRCX) and Applied Materials (NASDAQ:AMAT), can outgrow the market next year. InvestingPro data shows a projected revenue growth of 12% for FY2025, with 10+ additional ProTips available to subscribers through the comprehensive Pro Research Report.
In other recent news, Ichor Holdings reported its first-quarter 2025 earnings, missing expectations on both earnings per share (EPS) and revenue. The company posted an EPS of $0.12, below the anticipated $0.24, and revenue of $244.47 million, slightly under the expected $244.95 million. Analysts from Stifel have adjusted their outlook, lowering the price target for Ichor Holdings to $25 from $28, while maintaining a Buy rating. They anticipate in-line revenue for the upcoming second-quarter report but expect earnings per share to be at the lower end of guidance due to pressures on gross margins.
Additionally, DA Davidson has revised its price target to $45 from $50, citing concerns over the semiconductor market environment and tariff and export control uncertainties affecting demand. The company is also experiencing challenges with the transition to internally sourced components, impacting supply and margins. Despite these adjustments, DA Davidson maintains a Buy rating on Ichor Holdings. These developments highlight ongoing challenges and adjustments within the company and the broader semiconductor industry.
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