Citi goes ‘all in’ on semi equipment, upgrades five to Buy

Citi upgraded Nova (NVMI), Advanced Energy (AEIS), FormFactor (FORM), MKS Instruments (MKSI) (MSKI), and Veeco (VECO) to Buy from Neutral with price targets of $240, $138, $51, $130, and $33, respectively. After a 30% correction in the second half of 2024, the group is largely discounting a down 2025 wafer fab equipment year driven by lower domestic China and weak consumer memory demand offset partially by continued artificial intelligence spend tailwinds, the analyst tells investors in a research note. Citi expects key stock performance indicators like estimate revisions and memory pricing momentum to trough in the first half of 2025. The risk/rewards appear skewed to the upside as the group trades closer to historically attractive price-to-earnings levels and a discount to the S&P 500, contends the firm. As such, it is going “all in” and upgrading the fire stocks to align with “Phase 1” of its cyclical stock picking framework.