On Thursday, Stifel, a financial services firm, upgraded shares of TTM Technologies (NASDAQ:TTMI) from Hold to Buy and raised the price target to $19.00 from the previous $15.00. The adjustment follows TTM Technologies' strong first-quarter performance and an optimistic outlook for the company's growth prospects.
The company's backlog in aerospace and defense, which accounts for 46% of its sales, has been growing. This sector, along with anticipated double-digit growth in the data center market driven by AI demand, and signs of recovery in networking and semi-cap industries, are key factors contributing to the positive rating. TTM Technologies also expects to see margin improvements this year, despite facing a headwind from the launch of a new factory in Malaysia that could impact gross margins by more than 100 basis points.
TTM Technologies' shares are currently trading at approximately 8.7 times Stifel's new fiscal year 2025 earnings per share estimate of $1.70. Stifel's analysis suggests that the current stock price does not fully reflect the substantial and favorable transformations the company has undergone in recent years. These changes include a diversified end-market portfolio, enhanced aerospace/defense and RF capabilities, and facility expansion.
The new price target of $19.00 set by Stifel indicates an 11 times multiple on the projected earnings per share. This valuation is based on the firm's confidence in TTM Technologies' strategic improvements and its potential for continued growth in the coming quarters.
InvestingPro Insights
TTM Technologies (NASDAQ:TTMI) appears to be in a transitional phase, with Stifel's recent upgrade reflecting confidence in the company's future performance. This sentiment is echoed in some key metrics from InvestingPro. The company's market capitalization stands at a solid $1.5 billion USD, and while its historical P/E ratio is negative at -628.55, the adjusted P/E ratio for the last twelve months as of Q1 2024 is a more favorable 30.43. This suggests that investors may be looking past short-term challenges and focusing on potential earnings growth. Indeed, the PEG ratio, which measures the stock's price relative to its earnings growth rate, is 0.68—a figure that may indicate the stock is undervalued relative to its expected growth.
From a financial health perspective, TTM Technologies has a Price / Book ratio of 0.99 as of the last twelve months ending Q1 2024, which can be attractive to investors seeking assets at or near their intrinsic value. Additionally, the company's liquid assets exceed its short-term obligations, aligning with the InvestingPro Tips that highlight the company's liquidity as a positive factor. Despite a decline in revenue growth of -8.14% over the last twelve months, the quarterly revenue growth in Q1 2024 shows an uptick of 4.72%, potentially signaling a turnaround.
With analysts predicting that the company will be profitable this year, and considering the company's low revenue valuation multiple, these factors could suggest an opportunity for investors. For those interested in a deeper dive, there are additional InvestingPro Tips available that could provide further insights into TTM Technologies' investment profile. To explore these tips and gain an edge in your investment strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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