Ichor Holdings price target cut to $35, maintains buy rating

On Wednesday, TD Cowen adjusted its outlook on Ichor Holdings (NASDAQ:ICHR), a provider of fluid delivery subsystems for semiconductor capital equipment. The firm reduced the price target on the company's shares to $35.00 from the previous target of $48.00. Despite the lower target, the firm continues to recommend a Buy rating on the stock.

The analyst at TD Cowen cited the company's flat quarter-over-quarter sales guidance for September 2024 as a contributing factor to the decision. This guidance indicates the fourth consecutive quarter of similar revenue levels. However, the firm anticipates a recovery in the fourth calendar quarter of 2024 and into the calendar year 2025.

Although visibility into future performance remains limited, TD Cowen highlighted several positive aspects of Ichor Holdings. These include potential gross margin tailwinds, the introduction of new gas panel products, and a favorable growth setup heading into 2025. The analyst also noted that Ichor's shipments and revenues are expected to outperform the wafer fabrication equipment (WFE) sector at the beginning of a cycle.

The positive stance on Ichor Holdings is further supported by the analyst's view that "ICHR shipments/revs should outperform WFE at the beginning of a cycle." The firm's optimism about the stock is based on the expectation of the company's strong performance as the industry enters a new cycle.

In other recent news, Ichor Holdings reported steady Q1 2024 revenues of $201 million. The company anticipates a slight gross margin increase in the upcoming quarter despite a deceleration in EUV gas delivery build rates and a dip in higher-margin component sales. These are recent developments that have influenced the decisions of analysts at Needham and TD Cowen.

Needham has adjusted their price target for Ichor Holdings from $44 to $40 while maintaining a Buy rating. This adjustment follows Ichor's Q2 2024 earnings report and Q3 guidance, which aligned closely with market expectations. TD Cowen, on the other hand, raised their price target from $42 to $48, maintaining a Buy rating based on the expected recovery in investments in NAND technology and the stabilization of gas panel inventory levels. Both firms, despite acknowledging certain challenges, remain positive about Ichor's prospects leading up to the anticipated NAND recovery in 2025.

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