On Tuesday, Goldman Sachs maintained a Neutral rating on Amkor Technology (NASDAQ:AMKR), setting the price target at $32.00. The decision comes after Amkor Technology reported its third-quarter 2024 earnings per share (EPS) of $0.49, which was in line with the consensus from FactSet. However, the company's guidance for the fourth quarter of 2024 indicates an EPS of $0.36, which is 35% below the Street consensus.
Amkor Technology anticipates a steeper-than-usual seasonal decline in smartphone builds and market share losses, overshadowing signs of stabilization in other markets such as Automotive, Industrial, PC, and traditional servers. In response to these projections, Goldman Sachs has lowered its EPS estimates for Amkor from 2024 to 2026 by an average of 10%. Additionally, the firm has reduced its 12-month price target for Amkor shares to $32, a decrease from the previous target of $36.
The analyst from Goldman Sachs highlighted that while there are signs of market stabilization in certain sectors, the anticipated decline in smartphone builds and the loss of market share are significant factors in the revised projections. The lowered price target reflects these concerns and the adjustments in the EPS estimates.
Goldman Sachs suggests that before adopting a more positive outlook on Amkor Technology's stock, investors should look for early signs of sustained market share growth or improvements in the company's structural profitability. These indicators would provide a more favorable entry point into the stock and could signal a potential shift in the company's performance trajectory.
In other recent news, Amkor Technology reported its third-quarter earnings, which fell short of expectations, leading to a decrease in investor confidence. The semiconductor packaging and test services provider posted adjusted earnings per share of $0.49, while revenue came in at $1.86 billion, marking a 27% sequential increase and a 2.2% YoY increase. Despite strong demand for its Advanced SiP technology in the Communications and Consumer end markets, the company's earnings miss and outlook disappointed investors.
For the fourth quarter, Amkor forecasts revenue between $1.60 billion to $1.70 billion and earnings per share of $0.28 to $0.44, with the midpoint of this guidance range falling below current analyst expectations. The company's gross margin for Q3 was 14.6%, relatively flat compared to the previous quarter but down from 15.5% in the same period last year.
These are recent developments that have taken place at Amkor. The company has maintained its full-year 2024 capital expenditure forecast at approximately $750 million. CEO Giel Rutten stated that the company has focused on executing steep production ramps for several high-volume products and further strengthening key partnerships with leaders in the industry to ensure resilient regional supply chains.
InvestingPro Insights
To complement Goldman Sachs' analysis, recent data from InvestingPro offers additional context on Amkor Technology's financial position. Despite the challenges highlighted in the article, Amkor maintains a P/E ratio of 19.21, suggesting that investors are still pricing in some growth expectations. The company's market capitalization stands at $7.28 billion, reflecting its significant presence in the semiconductor industry.
InvestingPro Tips indicate that Amkor has raised its dividend for 4 consecutive years, demonstrating a commitment to shareholder returns even in a challenging market. This is particularly noteworthy given the company's current dividend yield of 1.07%. However, it's important to note that 5 analysts have revised their earnings downwards for the upcoming period, aligning with Goldman Sachs' cautious stance.
The company's revenue for the last twelve months as of Q2 2024 was $6.40 billion, with a revenue growth of -7.5% over the same period. This decline in revenue supports the concerns raised about market share losses and seasonal declines in smartphone builds. Nevertheless, Amkor's liquid assets exceed short-term obligations, suggesting a stable financial position in the near term.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips that could provide deeper insights into Amkor's financial health and market position.
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