Israeli chipmaker Tower Semiconductor (TSEM) is forecasting better-than-expected quarterly revenues amid robust demand for its chips from the auto sector.
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TSEM sees Fiscal first quarter 2025 revenue of $358 million, plus or minus 5%, versus the analyst consensus of $355 million. The mid-point of the range implies about 10% year-on-year growth.
The company also said it had met its target of sequential quarter over quarter revenue growth within 2024, with revenues up 18% between the first and fourth quarters. Meanwhile, fourth quarter earnings per share (EPS) of $0.59 was better than the analyst estimate of $0.53.
Despite the upbeat guidance and results TSEM stock was down over 4% in the premarket session on Monday, February 10th.
TSEM Hits 10% Growth Already
The company reported 5% quarter-over-quarter revenue growth to $387 million in the Fiscal fourth quarter, a rise of 10% on the same period a year ago. Full year revenue stood at $1.44 billion, gross profit was $339 million, and operating profit $191 million. Net profit for the full year of 2024 was $208 million, or $1.85 diluted EPS.
TSEM manufacturers analog and mixed-signal semiconductors used in cars for companies that design chips but outsource their fabrication.
During the quarter the company took on the first incremental costs associated with its facility in Agrate, Italy, a joint venture with STMicroelectronics (STM). It also released its new 300mm Silicon Photonics (SiPho) process, while its the lower margin legacy of 150mm flows were discontinued.
“Our 2025 revenue target is year-over-year growth, with sequential quarter-over-quarter revenue growth, and an acceleration in the second half of the year,” commented TSEM CEO Russell Ellwanger. “This momentum is fueled by increasing production shipments as our previously announced capacity investments progress through the final stages of customer qualifications.”
Last week, Wedbush initiated coverage of Tower Semiconductor with an Outperform rating and $60 price target. The firm’s bullish outlook is based on Tower’s recent outperformance, its longer-term opportunities in specialty technologies, and an advantageous diversified geographical footprint during a period of increasing geopolitical risk. Wedbush does see the potential for some mixed near-term demand signals, it believes this is well priced in following the recent decline in the valuation.
Is TSEM a Good Stock to Buy?
Overall, Wall Street has a Strong Buy on TSEM. The average TSEM price target of $60.00 implies about 23% upside from current levels but is subject to change in light of the latest earnings update.
