Semiconductor companies have been making waves in recent years, and Axcelis Technologies (ACLS) has been no exception. As a leading provider of ion implantation in the semiconductor industry, Axcelis offers critical technology solutions in the integrated circuit (IC) manufacturing process. The company has generated robust revenue and earnings growth, continuing into Q2 2024, as it anticipates exceeding top-and-bottom-line forecasts.
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The stock has increased by a remarkable 760% in the past five years. Yet, it trades at a discount to industry peers, making it an attractive option for value investors looking to participate in the surging semiconductor industry.
A Leader in a Niche Market
Axcelis Technologies is a market leader in a more niche area of the semiconductor industry: manufacturing and servicing ion implantation and other processing equipment. The company’s range of high-energy, high-current, and medium-current implanters and its aftermarket lifecycle products and services are primarily sold directly to semiconductor chip manufacturers.
Further, silicon carbide (SiC), a semiconductor base material and critical ingredient in high-performance power devices serving technologies such as EVs, PHEVs, charging, and solar energy, continues to command high demand. This trend is expected to persist, with the SiC market projected to expand at an impressive rate of 32.6% between 2024 and 2029. Axcelis Technologies’ Purion Power Series in SiC implantation is well-positioned to see steady growth potential.
According to a recent report, the global ion implantation market is projected to grow at a CAGR of 6.6% through 2030. At the same time, the SiC device market is expected to reach more than $10B by 2029 at a CAGR of 25%.
Axcelis’ Recent Financial Performance & Outlook
Axcelis’s financial performance for Q1 surpassed estimates. Revenue of $252.37 million beat analysts’ forecasts by $9.76 million, though it marked a slight year-over-year decrease of 0.6%. Yet, gross margin increased from 44.4% to 46% year-over-year. The operating profit was lower at $56.5 million than the previous quarter’s $79.1 million. Net income was $51.6 million, or $1.57 earnings per share (EPS), which came in significantly above the consensus expectation of $0.33.
The company has recently released initial financial results for Q2 2024, indicating higher revenue and diluted earnings per share. The forecast is now greater than $252 million in revenue and more than $1.38 per diluted share, exceeding prior projections of $245 million in revenue and $1.30 per diluted share. Further, Axcelis Technologies management remains optimistic about its second-half performance in 2024, with a focus on the fourth quarter.
What Is the Price Target for ACLS Stock?
The stock has been volatile, sporting a beta of 1.67. It declined for much of the past year until it rallied over 31% in the past three months. The stock trades in the lower half of its 52-week price range of $93.77 – $201.00 and is on the cusp of demonstrating solid positive price momentum by exceeding the 50-day (131.56) moving average and knocking on the door of doing the same for the 20-day (139.38) moving average. With a P/S ratio of 4.01x, the stock looks undervalued compared to the Semiconductor Equipment & Materials industry average of 7.93x.
Analysts following the company have mostly been constructive on the stock. For instance, DA Davidson analyst Thomas Diffely, a five-star analyst according to Tipranks’ ratings, recently raised the price target on the shares from $150 to $175 while maintaining a Buy rating. He noted multiple company-specific growth drivers, such as an anticipated industry upturn, geographic expansion, new product momentum, and strong operating leverage.
Overall, Axcelis Technologies is rated a Moderate Buy based on six analysts’ aggregate recommendations and price targets. The average price target for ACLS stock is $176.25, representing a potential upside of 28.73% from current levels.
Final Analysis on Axcelis
Axcelis Technologies continues to exhibit remarkable financial performance, defying top-and-bottom-line forecasts. The company is well-positioned in several areas of the semiconductor industry and is poised for consistent growth. Despite its recent volatility, Axcelis’ stock offers compelling value, trading at a discount to its peers yet indicating the potential for robust returns for long-term investors looking to invest in the thriving semiconductor sector.
