Mizuho sees strong EPS growth driving Entegris stock upgrade

On Thursday, Entegris Inc (NASDAQ: NASDAQ:ENTG) stock received an upgrade from a Mizuho analyst from Neutral to Outperform, with a new price target set at $143.00. The upgrade reflects the company's strong position in the semiconductor chemicals and materials sector, with Entegris showcasing the highest 10-year earnings per share (EPS) growth rate, approximately 22%, among its peers covered by the analyst.

The analyst noted that Entegris is capex-lite, which means it requires less capital expenditure to maintain its operations compared to others in the industry. This aspect contributes to the company's financial efficiency and potential for growth.

Additionally, the analyst highlighted that Entegris's next twelve months (NTM) price-to-earnings (P/E) ratio relative to the S&P Materials has decreased by 19% in the past 15 trading days. It is now below the 5-year median of approximately 1.8x, at 1.5x, and nearly a full standard deviation below the 5-year median when compared to the SOX semiconductor index.

The positive outlook for Entegris is further supported by recent strong electronic chemical results and robust guidance provided by Outperform-rated companies such as DuPont (NYSE:DD) and Element Solutions Inc (NYSE:ESI) within the electronics peer segment. These results bode well for Entegris, suggesting a favorable environment for companies operating in the electronic chemicals space.

The analyst also mentioned that Entegris's Chief Financial Officer (CFO) is scheduled to attend the Mizuho Industrials & Chemicals Conference on August 14, 2024. At this event, Entegris will be featured alongside DuPont, which is spinning off its electronic chemicals segment, and approximately 20 other materials firms. The conference will offer an opportunity for Entegris to present its financials and strategic outlook to investors and industry peers.

In other recent news, Entegris Inc showcased impressive financial performance in the second quarter of 2024, with sales reaching $813 million. This figure outperformed the company's guidance, marking a 10% increase from the previous quarter and a 6% rise year-over-year. Additionally, Entegris' gross margin significantly improved, growing over 300 basis points compared to the same period last year.

The company also announced a preliminary award for up to $75 million to support the construction of a new manufacturing facility in Colorado, with sales expected to commence in the latter half of 2025. In terms of future expectations, Entegris' full-year sales outlook is projected at approximately $3.3 billion, with an anticipated EBITDA margin of around 29% and a non-GAAP EPS forecast of $3.15.

In other developments, Entegris recently received an upgrade from a Mizuho analyst from Neutral to Outperform, reflecting the company's strong position in the semiconductor chemicals and materials sector. This upgrade is backed by Entegris' highest 10-year EPS growth rate among its peers, as well as its financial efficiency due to being capex-lite.

These recent developments underline Entegris' promising performance and potential for future growth in the semiconductor industry. However, it is important to note that these are projections and actual results may vary.

InvestingPro Insights

Following the upgrade by a Mizuho analyst, Entegris Inc (NASDAQ: ENTG) stands out with its robust financial and market performance. InvestingPro data reveals that Entegris has a market capitalization of $17.84 billion, indicating its significant presence in the semiconductor chemicals and materials sector. Despite a challenging market environment, as evidenced by a revenue decline of 12.73% over the last twelve months as of Q2 2024, the company maintains a high gross profit margin of 43.83%. This suggests efficient cost management and a strong pricing power within its industry niche.

Moreover, Entegris is trading at a high earnings multiple, with a P/E ratio of 101.11, which, while indicating a premium valuation, aligns with the high shareholder yield highlighted by one of the InvestingPro Tips. This could reflect the market's confidence in the company's future growth potential, supported by another tip that net income is expected to grow this year. Additionally, Entegris's liquid assets exceed its short-term obligations, providing financial flexibility and stability.

For investors seeking more in-depth analysis, there are additional InvestingPro Tips available on Entegris, including insights on earnings revisions, profitability predictions, and historical returns. Visit https://www.investing.com/pro/ENTG to explore these valuable resources and gain a comprehensive understanding of Entegris's investment profile.

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