On Monday, Needham adjusted its price target for Cohu (NASDAQ:COHU), a semiconductor test equipment supplier, to $34 from the previous target of $36, while retaining a Buy rating on the shares. The revision follows Cohu's first-quarter 2024 earnings report, which aligned with expectations, and the company's second-quarter guidance that fell slightly short of estimates.
Cohu announced that for the second quarter of 2024, it expects revenue to reach a midpoint of $105 million, which is below the consensus estimate of $108.1 million. Management indicated that while earlier headwinds have eased, they have not observed any significant positive momentum and predict steady results over the next few quarters.
The company's test cell utilization is currently at 72%, which is below the 80% level that would signal a trend towards increased capacity purchases. Needham highlighted the uncertainty regarding whether the mobile and computing sectors or the auto and industrial sectors would lead the anticipated recovery.
Needham's revised price target of $34 is based on 28 times the firm's lowered non-GAAP earnings per share estimate for the calendar year 2025. The research firm stated that they no longer expect a recovery in the second half of 2024 and have shifted their outlook for a recovery to 2025. Despite the lowered price target, Needham continues to see value in Cohu shares and has maintained its Buy rating.
InvestingPro Insights
As investors consider Needham's revised price target and outlook for Cohu, the latest InvestingPro data and insights offer additional context for the company's financial health and market performance. Cohu currently holds a market capitalization of approximately $1.39 billion, with a notable P/E ratio that underscores the challenges it faces. The company's revenue for the last twelve months as of Q1 2024 stands at $564.57 million, reflecting a significant decline of nearly 29%. This contraction is consistent with analyst expectations of a sales decline in the current year.
Despite these headwinds, Cohu's liquidity position is a bright spot, as the company holds more cash than debt and has liquid assets that exceed short-term obligations. This could provide some resilience in navigating uncertain market conditions. Additionally, while the stock price has experienced volatility and is trading near its 52-week low, analysts predict that Cohu will be profitable this year, offering a potential upside for investors.
For those looking to delve deeper into Cohu's financials and future prospects, there are over six additional InvestingPro Tips available for Cohu at InvestingPro. Interested readers can use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to exclusive insights and data to inform investment decisions.
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