On Wednesday, B.Riley reaffirmed its Buy rating on Onto Innovation Inc. (NYSE:ONTO) with a steady price target of $280.00. The firm's positive stance comes after recent developments, including the opening of the Packaging (NYSE:PKG) Applications Center of Excellence (PACE) R&D lab on September 30 and insights from the B. Riley Securities Consumer and Tech conference held on September 12.
The analyst praised Onto Innovation for its leadership and capabilities in addressing complex AI-related advanced packaging technology issues. The company's Firefly product has seen a fourfold increase in revenues year-over-year, contributing to a 46% rise in the Advanced Packaging and Specialty segment. Over 30 JetStep panel lithography systems, including the versatile X500 model, have been shipped worldwide.
Onto Innovation's systems are positioned to help alleviate yield challenges in AI infrastructure scaling, presenting an opportunity for the company to advance yield gains in advanced heterogeneous integration. The firm also noted Onto Innovation's confidence in achieving a 70% year-over-year inspection sales growth in the 2024 calendar year.
Long-term prospects for Onto Innovation appear strong, with the company eyeing revenue and earnings per share targets of $1.4 billion and $8.53, respectively, and eventually a $1.8 billion revenue aspiration. The analyst pointed out that a significant 18% year-to-date increase in the consensus estimate for the 2025 calendar year earnings per share has contributed to the stock's 48% rally this year, outpacing the semiconductor index.
B.Riley encourages investors to add to their positions in Onto Innovation, highlighting the potential for a 30% upside over the next 12 months to reach the $280 price target. The firm sees the current 32 times forward two-year consensus price-to-earnings ratio as attractively priced, approximately 10% below the 14-year highs, even considering pro-cyclical inflation.
In other recent news, Onto Innovation has been the focus of several positive developments. Oppenheimer maintained its Outperform rating on Onto Innovation shares and increased the price target to $275, reflecting confidence in the long-term demand for Onto's Dragonfly systems. The firm raised the 2025 revenue estimate by 1% to $1.19 billion and the 2025 operating income forecast by 1% to $382.5 million.
Onto Innovation also reported a 15% year-over-year increase in revenues. Analyst firms Stifel and Needham maintained a Buy rating for Onto, with Needham upgrading the company from Hold to Buy. Benchmark also upgraded the price target for Onto Innovation from $180 to $230.
The company announced the launch of its Packaging Applications Center of Excellence in Wilmington, Massachusetts, and the appointment of Dr. Stephen Schwartz to its board of directors. Onto Innovation has launched a new suite of products, including the JetStep X500 lithography system and the Firefly G3 inspection system, designed to support the industry's shift to glass core panels for advanced IC substrates and panel-level packaging.
InvestingPro Insights
Onto Innovation's strong market position and growth prospects, as highlighted in the article, are further supported by recent data from InvestingPro. The company's market capitalization stands at $9.9 billion, reflecting investor confidence in its potential.
InvestingPro Tips reveal that Onto Innovation holds more cash than debt on its balance sheet, indicating a strong financial position. This aligns with the company's ambitious revenue and earnings targets mentioned in the article. Additionally, the company has been profitable over the last twelve months, with a high return over the last year, supporting B.Riley's positive outlook.
The company's P/E ratio of 59.93 and Price to Book ratio of 5.41 suggest that investors are willing to pay a premium for Onto Innovation's growth prospects, particularly in AI-related advanced packaging technology. This is consistent with the article's mention of the company's leadership in addressing complex AI infrastructure challenges.
For readers seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Onto Innovation, providing deeper insights into the company's financial health and market position.
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