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Cohu shares target raised by Needham, buy rating held on recovery sign

EditorNatashya Angelica
Published 01/11/2024, 12:18
COHU
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On Friday, Needham, a financial analyst firm, adjusted its stock price target for Cohu (NASDAQ:COHU), a semiconductor test equipment supplier, to $30.00, up from the previous $27.00. Alongside this change, the firm reaffirmed its Buy rating on the stock.

Cohu recently disclosed its third-quarter results for 2024, which aligned closely with analyst estimates. Additionally, the company provided guidance for the fourth quarter, projecting a midpoint revenue of $95 million. This figure matches Needham's prediction, although it falls slightly short of the consensus estimate of $98.2 million.

The update from Cohu indicates a potential stabilization in its business, as it did not necessitate a reduction in the revenue forecast for the upcoming quarter, a first in recent times. Cohu's management highlighted that all business segments experienced a sequential increase in bookings, signaling a possible upturn.

The management also anticipates a recovery in the automotive and industrial semiconductor sectors, which is expected to spur growth in the following year. In response to these developments, Needham has revised its estimates and conservatively projects a 17% growth for Cohu in the coming year.

The revised stock price target of $30 reflects a modest increase, maintaining the Buy rating as the firm foresees a favorable trajectory for Cohu moving forward.

In other recent news, semiconductor equipment and services provider Cohu, Inc. reported Q2 revenues of nearly $105 million, aligning with its guidance, and anticipates Q3 revenue to be around $95 million with an expected gross margin of approximately 45%.

The company has secured several noteworthy contracts including one from a prominent European manufacturer for its Neon system designed for silicon carbide dies and another from a top-tier U.S. semiconductor memory manufacturer for its Neon inspection metrology platform.

Moreover, Cohu has received an order from a leading automotive semiconductor manufacturer for its Diamondx platform, designed for power management device testing. B.Riley adjusted its stock price target on Cohu to $34.00, down from the previous $40.00, while maintaining a Buy rating on the stock.

Despite challenges in the automotive and industrial markets, Cohu has qualified two new customers for its Krypton product in the automotive and aerospace sectors. These are recent developments that reflect Cohu's strategic focus on expanding its customer base and product offerings despite current market challenges.

InvestingPro Insights

To complement the analysis provided by Needham, recent data from InvestingPro offers additional context on Cohu's financial position and market performance. As of the last twelve months ending Q2 2024, Cohu reported revenue of $500.35 million, with a significant revenue decline of 32.94% year-over-year. This aligns with the challenging market conditions mentioned in the article and underscores the importance of the potential recovery in automotive and industrial semiconductor sectors that management anticipates.

InvestingPro Tips highlight that Cohu holds more cash than debt on its balance sheet, which could provide financial flexibility as the company navigates through the current market downturn. Moreover, liquid assets exceed short-term obligations, suggesting a solid short-term financial position. These factors may support Cohu's ability to invest in growth opportunities as the market stabilizes.

However, it's worth noting that Cohu is not currently profitable, with a negative P/E ratio of -41.44. This emphasizes the significance of the projected 17% growth in the coming year, as estimated by Needham, which could potentially improve the company's profitability metrics.

For investors seeking a more comprehensive analysis, InvestingPro offers 9 additional tips for Cohu, providing a deeper understanding of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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