On Thursday, Oppenheimer, a prominent financial firm, increased its price target on shares of Veeco (NASDAQ:VECO) Instruments Inc. (NASDAQ:VECO), a leading provider of semiconductor and other advanced thin film applications, to $55.00, up from the previous target of $45.00. The firm has maintained its Outperform rating on the stock.
Veeco Instruments reported first-quarter earnings on May 7, 2024, which led to a 21% increase in its share price, outperforming the NASDAQ's 9% rise during the same period. Oppenheimer's analyst has updated the company's financial model through 2026, reflecting this positive momentum and the potential for continued growth.
The firm believes that Veeco is strategically positioned to capitalize on the burgeoning artificial intelligence (AI)/high-performance computing (HPC) and electric vehicle (EV) megatrends. Veeco's exposure to AI comes indirectly through its involvement with GPU, HBM, and advanced packaging technologies. The company's laser spike annealing (LSA) and nanoimprint lithography (NSA) tools are expected to benefit significantly from increased AI spending.
In the realm of data storage, ion beam deposition/etching (IBD/E) tools are seen as a secondary beneficiary, given their essential role in hard disk drive (HDD) head manufacturing. Moreover, Veeco's chemical vapor deposition (CVD) tools are targeting silicon carbide (SiC) traction inverters, which could expand the total addressable market (TAM) into the EV sector.
Looking ahead, Oppenheimer forecasts medium to long-term growth to be driven by leading-edge logic and memory sectors. The financial firm has adjusted its calendar year 2024 and 2025 estimated earnings per share (EPS) to $1.80 and $2.16, up from $1.75 and $1.90, respectively, and has introduced a 2026 EPS estimate of $2.50.
The new price target of $55 is based on a 22 times multiple of the firm's 2026 estimated EPS, compared to the semiconductor industry's average multiple of 26 times (22 times excluding NVIDIA (NASDAQ:NVDA)) within a three-year trading range. Oppenheimer emphasizes Veeco's diverse growth drivers, which include LSA/NSA, IBD, CVD, and metal-organic chemical vapor deposition (MOCVD) technologies, as the basis for reiterating its Outperform rating.
In other recent news, Veeco Instruments Inc. has been the subject of increased interest from several analyst firms following stellar financial results. Needham has increased its price target for Veeco from $43.00 to $46.00, following a quarter that exceeded expectations. Veeco's first quarter of 2024 results and guidance for the second quarter surpassed Wall Street's predictions, leading to heightened confidence in the potential expansion of applications for Veeco's anneal products.
Benchmark also raised its price target for Veeco from $40.00 to $42.00, following strong financial results. Veeco has recently announced robust sales figures, attributing much of its success to its Laser Spike Annealing (LSA) technology.
Moreover, in its first quarter of 2024, Veeco reported a strong performance with $174 million in revenue and non-GAAP earnings per share (EPS) of $0.45. The company received a significant multi-tool laser annealing order for a 2-nanometer process, marking a significant achievement.
These are all recent developments that reflect the market's confidence in Veeco's growth prospects.
InvestingPro Insights
As Veeco Instruments Inc. (NASDAQ:VECO) continues to make strides in the semiconductor and advanced thin film applications sector, recent data and analysis from InvestingPro provide additional context to Oppenheimer's upbeat assessment. With a market capitalization of $2.6 billion, Veeco's financial health is underscored by a solid revenue growth of 6.87% over the last twelve months as of Q1 2024. This is complemented by an even more impressive quarterly revenue growth of 13.67% for Q1 2024, signaling robust business momentum.
Analyzing performance metrics further, Veeco's gross profit margin stands at a strong 43.42%, reflecting efficient operations and cost management. Moreover, the company has achieved an EBITDA growth of 37.82% over the same period, indicating substantial earnings before interest, taxes, depreciation, and amortization.
InvestingPro Tips highlight that analysts are optimistic about Veeco's future, with three analysts revising their earnings upwards for the upcoming period and predicting that the company will be profitable this year. Additionally, Veeco's strong return over the last three months, with a price total return of 31.47%, aligns with the positive outlook presented by Oppenheimer.
For readers seeking a more comprehensive analysis, InvestingPro offers additional insights on Veeco. There are 13 more InvestingPro Tips available, which can be accessed through InvestingPro's platform. To enhance your investing strategy with these valuable tips, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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