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Investing.com - Stifel has reduced its price target on Onto Innovation Inc. (NYSE:ONTO) to $110.00 from $117.00 while maintaining a Hold rating ahead of the company’s second-quarter earnings report. The stock, currently trading at $90, near its 52-week low of $85.88, appears undervalued according to InvestingPro analysis, with analyst targets ranging from $90 to $190.
The semiconductor equipment maker is scheduled to release its June quarter results on Thursday after market close, with Stifel expecting the company to generally meet consensus estimates, showing significant year-over-year strength in Advanced Nodes offset by headwinds in Advanced Packaging (NYSE:PKG). Despite recent challenges reflected in a 51.86% price decline over the past six months, the company maintains strong financial health with an impressive current ratio of 8.42 and robust revenue growth of 21.23% over the last twelve months.
For the third quarter ending September, Stifel projects revenue to decline in the low-teens sequentially to $220 million, reflecting more first-half weighted memory spending in Advanced Nodes, aligning with management’s previous signals of a meaningful revenue pause in the third quarter.
Key focus areas for the upcoming earnings report include competition and market outlook in advanced packaging, conditions for revenue and wafer fab equipment (WFE) recovery in the fourth quarter, and details about the acquisition of Semilab’s materials analysis business.
Stifel noted industry-wide wafer fab equipment shipments are plateauing in the second half of the year, with some DRAM investment timing shifting more toward the first half of next year, leading the firm to reduce its fourth-quarter and calendar year 2026 estimates for Onto Innovation. For deeper insights into Onto Innovation’s financial health, growth prospects, and extensive metrics, access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
In other recent news, Onto Innovation Inc. announced its acquisition of Semilab International’s materials analysis business for approximately $545 million. This acquisition, which includes $475 million in cash and shares of Onto Innovation common stock, aims to expand Onto Innovation’s portfolio with four new product lines focused on wafer contamination monitoring and materials interface characterization. The acquired business has shown significant growth, with a 20% annual increase since 2021, and is projected to generate around $130 million in revenue by 2025. In addition, Onto Innovation has appointed Brian Roberts as its new Chief Financial Officer. Roberts brings extensive experience from his previous roles, including CFO positions at Sensata Technologies Holdings PLC and Insulet (NASDAQ:PODD) Corporation.
Benchmark has reiterated its Buy rating for Onto Innovation, with a price target of $190, following discussions with the company’s management. The firm anticipates a rebound in Onto Innovation’s performance in the fourth quarter of 2025, despite a projected trough in the third quarter. Meanwhile, Stifel has maintained its Hold rating with a $117 price target after the acquisition announcement. Onto Innovation has experienced some market share loss to KLA in the defect analysis segment, as noted by Benchmark.
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