UBS cuts Amkor Technology price target to $27.65, keeps neutral

Tuesday, UBS has revised its price target for Amkor Technology (NASDAQ:AMKR) shares, reducing it to $27.65 from the previous target of $32.50. Despite the adjustment, the firm has maintained a Neutral rating on the stock. Currently trading at $21.92, the semiconductor packaging company appears undervalued according to InvestingPro analysis, with a market capitalization of $5.4 billion and a P/E ratio of 14.6x.

The adjustment by UBS comes in the wake of Amkor Technology’s forecast, which indicates that sales could either remain stagnant or experience a slight recovery in 2025. This outlook is supported by a robust recovery in content for next-generation products, particularly those for Apple (NASDAQ:AAPL), and potential improvements in demand within the automotive and industrial sectors. InvestingPro data shows the company maintains strong financial health with a current ratio of 2.06, indicating solid liquidity to support operations during this transition period.

UBS analyst Haas Liu has expressed concerns about the risks to Amkor’s sales guidance. The firm anticipates a 2% year-over-year decline in sales, taking into account the limited opportunities presented by the company’s 2.5D packaging technology in Blackwell GPUs. This is expected to only partially compensate for the decline in sales of the Hopper GPU, and a delay in the broader demand recovery that was anticipated to follow a period of stabilization in the first half of 2025.

In order for Amkor to achieve a flat sales performance for the year 2025, UBS estimates that the company would require an exceptionally strong recovery in the second half of the year, with sales needing to increase by 35-40%. This is a significant leap from the 20-30% seasonal variations observed in previous years.

Additionally, UBS has highlighted concerns regarding Amkor’s capital expenditure growth during a period of subdued sales, which could further impact the company’s margins and earnings outlook. The firm’s analysis suggests that the necessary recovery in the latter half of 2025 is ambitious and may pose challenges for Amkor Technology’s financial performance. With analyst targets ranging from $24 to $36, investors seeking deeper insights can access comprehensive analysis and 8 additional key ProTips through InvestingPro’s detailed research reports.

In other recent news, Amkor Technology reported notable developments in its fourth-quarter earnings and revenue results. The company exceeded analyst expectations with adjusted earnings per share of $0.43, surpassing the forecasted $0.38. However, its revenue of $1.63 billion fell slightly short of the projected $1.66 billion, marking a 7% YoY decrease.

Amkor’s guidance for the first quarter of 2025 did not meet analyst expectations, predicting earnings per share between $0.01 and $0.17, considerably lower than the anticipated $0.31. The company also projected its revenue to range from $1.225 billion to $1.325 billion, again falling below the analyst’s forecast of $1.464 billion.

For the full year 2024, the company reported net sales of $6.32 billion, a slight decrease from $6.50 billion in 2023. Amkor’s net income for the year was $354 million, or $1.43 per diluted share, compared to $360 million, or $1.46 per diluted share, in the previous year.

Despite a challenging year, the company highlighted some positive developments, such as the successful ramp-up of its new facility in Vietnam and a new record for Advanced SiP revenue. Additionally, Amkor’s board of directors approved a 5% increase in the quarterly cash dividend and a special cash dividend of $0.40546 per share in December 2024.

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