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On Friday, Stifel analysts maintained their Buy rating and $42.00 price target for Ichor Holdings (NASDAQ:ICHR), following a series of non-deal roadshow (NDR) meetings with the company’s senior management. According to InvestingPro data, the stock currently trades at $28.19, suggesting significant upside potential to the analyst target, despite a challenging YTD performance of -13.38%. The firm’s analysts highlighted a recovery in business levels, with first-quarter revenue expected to increase by 17% to 27% year-over-year and further growth anticipated in the second half of the year. This positive outlook is supported by improved visibility in customer shipments for etch and deposition equipment, which are essential for advanced foundry and NAND investments.
Ichor’s gross margin (GM) outlook was also noted as a positive surprise during the previous earnings call. Management’s focus on qualifying and ramping up internally-machined components was emphasized, as it is a key element in the company’s strategy to expand gross margins by several hundred basis points by the end of the year, aiming for record levels next year. InvestingPro data shows current gross margins at 12.28%, confirming the need for improvement, though the company maintains strong liquidity with a current ratio of 3.34.
The discussion around tariffs was also addressed, noting that while Ichor’s integration and manufacturing are primarily based in the U.S. and Southeast Asia, some machining occurs in Mexico. Despite the fluidity of the tariff situation, Ichor is considered to have options across its broader geographic footprint. The company was able to pass along costs during the inflationary period caused by COVID.
Stifel’s analysts concluded their commentary with a reaffirmation of their optimism regarding Ichor’s recovery trajectory and margin expansion, reiterating their Buy rating on the stock. They believe the company’s outlook remains intact and aligns with the improving industry dynamics. InvestingPro analysis reveals additional insights, including expectations for net income growth this year and an 18% revenue growth forecast for FY2025. Subscribers can access the comprehensive Pro Research Report, which provides detailed analysis of Ichor’s financial health, valuation metrics, and growth prospects among 1,400+ top stocks.
In other recent news, Ichor Holdings reported its fourth-quarter 2024 earnings, showcasing a revenue increase but missing the earnings per share (EPS) expectations. The company achieved a revenue of $233 million, surpassing forecasts, yet the EPS was $0.08, falling short of the anticipated $0.27. Despite this, the company’s stock reacted positively, reflecting investor optimism about the strong revenue performance and strategic debt reduction. For the full year, Ichor Holdings’ total revenue reached $849 million, marking a 5% growth from the previous year. Analysts from firms such as B. Riley Securities and Stifel noted the company’s strategic positioning in the semiconductor market and its efforts in margin improvement through new products. The company also provided guidance for the first quarter of 2025, projecting revenue between $235 million and $255 million and an expected gross margin of 14-15%. Ichor Holdings’ management expressed confidence in their ability to outperform growth in wafer fab equipment and emphasized the importance of new products in driving margin improvement.
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