The Future of Semiconductor Testing: Cohu, Inc. Outlook
When it comes to the semiconductor industry, staying ahead of the curve is crucial. That’s why Citi recently adjusted its outlook on Cohu, Inc. (NASDAQ:), a leading semiconductor test equipment supplier. Despite lowering its price target from $40.00 to $36.00, Citi has maintained its Buy rating on the stock.
In the latest report, Cohu announced its March-quarter results, meeting expectations. However, the company provided guidance indicating a slight dip in June-quarter revenue, with a projected 2% decrease quarter-over-quarter, falling 3% below market consensus. This trend is mainly driven by challenges in the mobile sector.
The company noted a uptick in test cell utilization rates for the March quarter, particularly in automotive and industrial sectors, standing at 78%, while mobile and compute sectors hovered in the high-60s. Looking ahead, Cohu expects a steady business climate in the next one to two quarters, with potential growth by the end of the year and in 2025.
Furthermore, Cohu has raised its gross margin target by 1% in its mid-term model, citing improved cost profiles. The company is banking on AI on-the-edge technology to achieve its $1 billion revenue target. However, Citi has revised EPS estimates for 2024 and 2025 downward due to a slower recovery, resulting in a new price target of $36 based on a consistent 19 times P/E multiple.
InvestingPro Insights
Investors looking to delve deeper into Cohu, Inc. (NASDAQ:COHU) can leverage InvestingPro’s metrics and tips for a more comprehensive view. The company’s market cap stands at $1.39 billion, with a high P/E ratio reflecting investor optimism about future growth. However, revenue has declined by 28.93% in Q1 2024, aligning with expectations of a sales downturn this year.
InvestingPro Tips highlight that Cohu has a healthy balance sheet with more cash than debt, providing financial flexibility. While the company’s short-term financial position seems solid, analysts anticipate a drop in net income this year. With the stock trading near its 52-week low, caution is advised for investors considering Cohu.
For a more in-depth analysis, investors can explore InvestingPro’s additional tips, which offer insights into valuation and profitability. Use code PRONEWS24 for an extra 10% off a yearly or biyearly Pro or Pro+ subscription, granting access to valuable information. Keep an eye on Cohu’s upcoming earnings date on August 1, 2024, and consider the analysts’ fair value estimate of $36 against InvestingPro’s $29.28 for better decision-making.
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