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On Tuesday, Morgan Stanley initiated coverage on shares of Gudeng Precision Industrial Co Ltd (3680:TT) with an Overweight rating and a price target of NT$700. The firm highlighted Gudeng's position as a leading equipment provider in Taiwan, specializing in EUV mask carriers and wafer carriers.
Gudeng Precision boasts a significant 85% global market unit share in EUV pods, which positions the company as a primary beneficiary of the increasing adoption of EUV technology and the migration to advanced node technology. The company's revenue shows a strong correlation to ASML (AS:ASML)'s EUV installed base, with a correlation coefficient of 0.97. In 2023, EUV pod revenue made up 45% of Gudeng's total revenue.
The firm forecasts robust growth for Gudeng Precision, projecting the company's revenue to surpass the overall semiconductor Total Addressable Market (TAM) growth in the years 2024-2025. Additionally, Morgan Stanley anticipates a Compound Annual Growth Rate (CAGR) of 38% in earnings for Gudeng from 2023 to 2026.
At the time of the report, Gudeng's stock was trading at 25 times its projected 2025 earnings per share (P/E). The firm's positive outlook is based on the company's strong market share, correlation with industry growth drivers, and expected earnings performance over the next few years.
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