On Wednesday, Oppenheimer adjusted its outlook on Veeco (NASDAQ:VECO) Instruments Inc. (NASDAQ:VECO) shares, raising the price target to $45 from the previous $40, while maintaining an Outperform rating on the stock.
The firm's analysts are optimistic about Veeco's growth opportunities, particularly in laser spike annealing (LSA), nanoimprint systems (NSA), and ion beam deposition/etching (IBD/E) technologies.
The company's full-year 2024 revenue is projected to increase by 5-10%, with the higher end of this range dependent on potential gains in Data Storage and the Chinese market. Revenue forecasts for the first and second halves of 2024 are set at $350 million and $360 million, respectively, with the semiconductor sector being a significant driver.
Veeco's lead times have returned to a pre-pandemic range of 6-9 months, and the backlog is predominantly in the semiconductor area. The firm's analysis indicates that global fab capacity expansions are fueling growth in LSA/NSA, with a serviceable available market (SAM) estimated to reach $1.2 billion by 2028. Veeco currently holds over 50% of the market share in laser annealing, serving four leading logic and one memory customer.
The company's presence in China is noted as a substantial contributor to revenue in the near term for trailing edge LSA technology. Looking ahead, growth is expected to be driven by leading-edge logic and memory applications.
Additionally, IBD/E technology growth is anticipated to come from extreme ultraviolet (EUV) lithography masks, thin-film hard disk drive (HDD) heads, and metal resistivity applications.
Reiterating the Outperform rating, Oppenheimer sees Veeco's medium to long-term growth being sustained by these advanced technology segments. The new price target reflects the firm's confidence in Veeco's market position and growth prospects.
InvestingPro Insights
Recent analysis from InvestingPro underscores the potential that analysts are seeing in Veeco Instruments Inc. (NASDAQ:VECO). The company's net income is expected to grow this year, a promising sign for investors looking at the long-term health of the company. This aligns with Oppenheimer's optimistic outlook and their revised price target. In addition, Veeco is trading near its 52-week high, currently at 96.6% of this peak, indicating a strong market sentiment.
InvestingPro Data also reveals a notable 6.87% revenue growth over the last twelve months as of Q1 2024, with a further quarterly increase of 13.67% in Q1 2024. This growth trajectory is consistent with the company's projections and the market share expansion in laser annealing technologies detailed by Oppenheimer. Furthermore, with a current market capitalization of $2.2 billion and a forward P/E ratio of 33.03, Veeco's financials reflect its market position and the opportunities ahead.
For investors interested in deeper analysis, there are additional InvestingPro Tips available, including insights on earnings revisions by analysts and the company's debt levels. These tips provide a comprehensive view of Veeco's financial health and future prospects. Discover more tips and tailor your investment strategy with InvestingPro at https://www.investing.com/pro/VECO, and don't forget to use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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