Stifel maintains Buy rating, $42 target on Ichor Holdings stock

On Monday, Stifel analysts reiterated their Buy rating and $42.00 price target for Ichor Holdings (NASDAQ:ICHR) stock, representing a significant upside from the current price of $27.46. The firm’s analysts expect an upward normalization of margins and profitability in the first quarter ending March and remain optimistic for the year ahead. They believe that Ichor’s product mix could serve as a gross margin tailwind throughout 2025, particularly important given the company’s current modest gross profit margin of 11.7%. According to InvestingPro data, analyst targets range from $35 to $50, suggesting strong potential upside.

The analysts’ outlook is reinforced by direct customer and peer earnings reports, which largely suggest a growth trend across the semiconductor sector for the year 2025. Stifel is keen to gain further insights from management on their view that 2025 revenue could surpass current expectations, which at the time consensus modeled at a 15% growth. InvestingPro analysis shows the company maintains a strong financial position with a current ratio of 3.64, indicating ample liquidity to support growth initiatives. Get access to 10+ additional exclusive ProTips and comprehensive financial metrics with InvestingPro.

Additionally, with industry-wide wafer fabrication equipment (WFE) spending anticipated to exceed previous peaks this year, Stifel suggests that suppliers of semiconductor capital equipment subsystems, like Ichor, may present increased tactical appeal to investors.

Ichor Holdings, as a key player in the supply chain, is expected to benefit from these industry dynamics. Stifel’s analysis points to a robust sector outlook and the potential for Ichor to outperform market expectations.

The reiterated Buy rating and price target signal Stifel’s confidence in Ichor Holdings’ prospects amid a positive semiconductor industry forecast. Investors and market watchers will likely monitor the company’s performance closely as the year progresses, especially in light of the anticipated growth in WFE spending.

In other recent news, Ichor Holdings reported robust fourth-quarter results with revenues surpassing expectations and an optimistic outlook for the first quarter of 2025. The company’s preliminary Q4 2024 results indicated an offset to earnings per share contributions from a higher revenue line. Furthermore, Ichor’s preliminary outlook for Q1 2025 projects revenues ranging from $235 to $250 million, anticipating a gross margin recovery to 13%-15%.

TD Cowen analyst Krish Sankar adjusted the price target on Ichor Holdings to $38.00, a decrease from the previous $40.00, while maintaining a Buy rating on the stock. However, analysts from Needham have downgraded Ichor’s stock from Buy to Hold, citing a mild equipment cycle and valuation concerns.

Despite these adjustments, Ichor maintains a strong liquidity position with a current ratio of 3.64. The company’s third-quarter results also showed sales reaching $211 million, marking a 4% sequential growth. Moving forward, Ichor anticipates a 7% to 10% revenue increase in the second half of 2024 over the first half, and a gross margin flow-through of over 30% in Q4 2024. These are the recent developments in Ichor Holdings.

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