Although the market has cooled a bit on semi equipment names in recent months, Ultratech (NASDAQ:UTEK) continues to be its own worst enemy as revenue and order growth remain frustratingly erratic. On the positive side, the company enjoys a strong presence in advanced packaging and the support of major customers like Taiwan Semiconductor (NYSE:TSM), and it does seem as though the company's LSA tools are getting another look at 7nm and 10nm nodes. On the negative side, competition remains a real threat and it just seems like management cannot get this business on a steady trajectory.
A fair value in the mid-$20's is still valid assuming ongoing order growth in advanced packaging and 28nm laser annealing, with growth in inspection, nano, and sub-28nm annealing more of a "it'd be nice if it happened..." While the company does have over $9/share in cash on the balance sheet, it may be difficult for management to translate that into a meaningful M&A transaction.
These shares continue to have that "if they just get out of their own way" potential, but I can't argue that investors should favor this name over other equipment companies like Advanced Energy (NASDAQ:AEIS), Rudolph (NASDAQ:RTEC), and Orbotech (NASDAQ:ORBK) given the consistent inconsistency.
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The Ultratech Two-Step Continues