On Monday, Goldman Sachs (NYSE:GS) adjusted its stance on Advantest Corp (6857:JP) (OTC: ATEYY), elevating the stock from Neutral to Buy and simultaneously increasing its price target to ¥8,100, up from the previous ¥6,000.
The firm anticipates that Advantest, which specializes in high-end System-on-Chip (SoC) testers and holds a significant market share, will see an expansion in sales beyond initial projections. This growth is expected due to the extended test times required for semiconductors utilized in high-performance computing (HPC) and artificial intelligence (AI) applications.
The analyst from Goldman Sachs highlighted that the consensus earnings forecasts for fiscal year March 2025 align with the company's own guidance, which saw an uplift at the first-quarter results. However, the firm projects that the robust demand for high-end SoC testers will persist. The beginning of an earnings upcycle is seen as a potential driver for future share price appreciation.
Goldman Sachs has also introduced a new operating profit estimate for fiscal year March 2026 that is nearly 30% higher than the current Bloomberg consensus. This revision reflects a more optimistic outlook on Advantest's financial performance over the next couple of years. The firm's analysis suggests that rising expectations for earnings throughout fiscal years March 2025 to 2026 could act as a key factor in the stock's future trajectory.
The revised price target of ¥8,100 implies a 35% increase from the former target, indicating a strong confidence in Advantest's growth potential.
The upgrade to a Buy rating is based on an estimated EV/EBITDA multiple of 20X for the fiscal year ending March 2026, which Goldman Sachs believes is justified by the company's market position and the anticipated sales growth in its high-end SoC testing segment.
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