On Thursday, B.Riley increased the price target for shares of Axcelis Technologies (NASDAQ:ACLS) to $190 from $175, maintaining a Buy rating on the stock.
The adjustment follows the company's recent announcement of a raised second-quarter sales and earnings per share (EPS) guidance on Tuesday, July 9, and a new long-term total addressable market (TAM) outlook. Axcelis, a specialist in ion implantation, revealed an ambitious target model for the calendar year 2027, with expectations of $1.6 billion in sales and $11.50 in EPS.
The firm's analysis highlighted four main positives from Axcelis' update. Firstly, they noted steady TAM growth with substantial multi-year gains, projecting a compound annual growth rate (CAGR) of 13.5% from the anticipated levels in the calendar year 2024 to 2027's revenue target of $1.6 billion.
Secondly, the target gross margin (GM) remains at 45.0%, suggesting the company has accounted for potential product and customer mix challenges. Thirdly, the firm believes Axcelis' growth strategies are robust, building on past successes and potentially offering upside to the target model in certain geographies and end-use areas.
Despite a 3.5% decline in the SOX index and a shift from a leader to laggard in the first half of the year, which saw Axcelis' shares fall 7.5% on Thursday, B.Riley sees the current 18.0x forward two-year consensus price-to-earnings (P/E) ratio as a 37% discount to the SOX, presenting a significant buying opportunity.
The firm's confidence in Axcelis' execution towards its target model prompted the decision to raise the price target, offering a 31% upside from the current levels.
In other recent news, Axcelis Technologies has reported strong financial results for Q1 2024, with revenues of $252.4 million and earnings per diluted share of $1.57.
The company has also expanded its operations in Japan, opening new service offices in Chitose, Hokkaido, and Kumamoto, Kyushy. This move is part of Axcelis's strategic efforts to enhance its market share and provide localized support for its Purion ion implant equipment.
In the realm of analyst notes, Craig-Hallum upgraded Axcelis from Hold to Buy, maintaining a stock price target of $130.00. This adjustment is based on a 15 times multiple of the projected 2025 earnings per share (EPS) of $8.70. Meanwhile, DA Davidson lowered its price target for Axcelis to $150.00 from $175.00, while retaining a Buy rating.
InvestingPro Insights
Following B.Riley's increased price target for Axcelis Technologies, a closer look at the company's financial health and market performance through InvestingPro data provides additional context. Axcelis holds a market capitalization of $4.7 billion and is trading with a P/E ratio of 19.14, which indicates a reasonable valuation when paired with its near-term earnings growth. Notably, the company's revenue has grown 16.34% over the last twelve months as of Q1 2024, reflecting its strong market position and operational efficiency.
InvestingPro Tips highlight that Axcelis not only maintains a cash position stronger than its debt but also has liquid assets that exceed short-term obligations, reinforcing the company's financial stability. Furthermore, the stock has experienced a strong return over the last three months, with a price total return of 38.2%, showcasing investor confidence. These insights, coupled with the analyst prediction of profitability this year, underscore the potential upside for investors. For readers looking to delve deeper into Axcelis Technologies' investment potential, InvestingPro offers a wealth of additional tips. To explore these insights and benefit from a special offer, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 12 additional InvestingPro Tips available that could further inform investment decisions.
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