Tuesday, an analyst from Craig-Hallum adjusted the rating on Aehr Test Systems (NASDAQ:AEHR) stock, shifting from Buy to Hold. This change follows the company's pre-release of its third-quarter results and a reduction in its fiscal year 2024 (FY24) May expectations.
Aehr Test Systems has revised its FY24 outlook downward for the second consecutive quarter, a notable shift from its initial guidance of over $100 million in revenue.
The company has been experiencing challenges due to a decrease in semiconductor capital spending in the automotive sector. Additionally, the timeline adjustments in electric vehicle (EV) launches and production escalations have had a greater impact on the company's bookings and revenue forecasts than management initially expected.
Despite these setbacks, the analyst acknowledged Aehr Test Systems' potential for long-term growth, especially with the anticipated expansion of silicon carbide usage in EVs.
However, the present uncertainties have led to the analyst's decision to downgrade the stock to Hold. Alongside the rating change, the price target for Aehr Test Systems has been lowered to $12, based on a 25 times multiple of the forecasted fiscal year 2025 (FY25) earnings per share (EPS) of $0.48. This new price target reflects a more conservative outlook in light of the current challenges faced by the company.
InvestingPro Insights
Following the recent downgrade by an analyst from Craig-Hallum, Aehr Test Systems (NASDAQ:AEHR) presents a mixed financial landscape. According to InvestingPro data, AEHR boasts a market capitalization of $328.02M and a P/E ratio of 14.78, with an adjusted P/E ratio for the last twelve months as of Q2 2024 at 15.62. Despite the downward revision in its FY24 outlook, AEHR's revenue growth remains robust at 33.53% for the last twelve months as of Q2 2024, showcasing the company's capacity to increase its top line.
InvestingPro Tips suggest that AEHR holds more cash than debt, providing a strong balance sheet foundation, and the stock's RSI indicates it is currently in oversold territory. These factors could signal potential opportunities for investors considering the company's long-term growth prospects, especially in the expanding silicon carbide market for EVs. Nevertheless, it's worth noting that AEHR has experienced significant price volatility, with a 1-month price total return of -29.73% and a 3-month price total return of -61.21%, reflecting the market's reaction to the recent challenges. Investors interested in deeper insights can find additional InvestingPro Tips for AEHR, which could help navigate this complex investment landscape. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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