On Friday, Craig-Hallum upgraded Axcelis Technologies (NASDAQ:ACLS) from Hold to Buy, maintaining a stock price target of $130.00. The adjustment follows the company's first-quarter report and is based on a 15 times multiple of the projected 2025 earnings per share (EPS) of $8.70.
The firm had downgraded the stock nine months prior, citing a significant year-to-date increase at that time and a valuation exceeding 20 times their 2025 EPS estimate.
Since the downgrade, Axcelis' shares have experienced a pullback of over 40%, and the 2024 EPS estimate has been adjusted from $7.47 to $6.00. The firm now believes that the recent estimate reductions are complete and considers the stock to be more attractively priced at approximately 12 times the 2025 EPS projections.
This new valuation comes as the semiconductor company is poised for growth in power device expansion and is expected to benefit from a recovery in consumer-driven semiconductors and memory markets.
Craig-Hallum's positive stance is further supported by Axcelis' strategic positioning to capitalize on the expansion of both silicon and silicon carbide power devices. The company is also anticipated to benefit from an eventual rebound in the general mature node semiconductors and memory sectors, which are driven by consumer demand.
In July, Axcelis plans to provide an update to its $1.3 billion target model for 2025. Analysts believe this could reveal more evidence of the company's multiyear growth potential. The update is eagerly awaited by investors as it may clarify the company's long-term financial trajectory and operational goals.
InvestingPro Insights
Following the upgrade from Craig-Hallum, Axcelis Technologies (NASDAQ:ACLS) demonstrates a strong financial position with a market capitalization of $3.64 billion and a P/E ratio that stands at 14.08.
This ratio further adjusts to 13.91 when considering the last twelve months as of Q1 2024, indicating a trading level that is low relative to near-term earnings growth, with a PEG ratio of just 0.4. Moreover, the company's gross profit margin remains robust at 44.58%, supporting the optimism surrounding its strategic positioning in the semiconductor market.
InvestingPro Tips reveal that Axcelis holds more cash than debt on its balance sheet and has liquid assets that exceed short-term obligations. These factors, combined with the company's ability to cover interest payments with its cash flows, lay a solid foundation for financial health.
Moreover, analysts predict the company will maintain profitability this year, which is consistent with its performance over the last twelve months. Although Axcelis does not pay a dividend, the stock has seen a strong return over the last decade and five years, highlighting its potential as a growth investment.
For readers looking to delve deeper into Axcelis' financial health and growth prospects, InvestingPro provides additional insights. There are 10 more InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/ACLS. To enhance your investment research, use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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