SkyWater Shares Soar, Analyst Find It Capable Of Decoupling From Broader Semi Slowdown

  • Needham analyst Rajvindra Gill maintained a Buy rating on SkyWater Technology Inc (NASDAQ: SKYTand set a price target of $20.00.

  • SKYT reported a solid quarter and guidance, with margins being the bright spot, Gill wrote in a Tuesday note titled “Can SkyWater Decouple From the Broader Semi Slowdown? We Believe So.”

  • He highlighted ATS is the primary driver for the beat, growing 18% Q/Q and 57% Y/Y.

  • He further noted that Phase 2 of the Rad-Hard award worth $100 million (RH90).

  • He also emphasized the $36 million grant award to expand capacity in Florida for advanced packaging.

  • Wafer Service revenue grew 36% Y/Y due to better pricing and higher fab efficiency, he noted.

  • The gross margins inflect, growing to 16.8% above the 8% estimate due to volume, cost reduction, and fixed cost absorption, he added.

  • Gill believes SKYT is uniquely buffered to a broader semi-slowdown as ~2/3 of its revenue is tied to company R&D projects.

  • During a downcycle, companies invest in capacity for the inevitable upswing in the cycle.

  • Moreover, he was more confident that margins were breaking out and could expand in CY23.

  • Price Action: SKYT shares traded higher by 31.70% at $11.38 on the last check Tuesday.

Latest Ratings for SKYT

Date

Firm

Action

From

To

Feb 2022

Needham

Maintains

Buy

Nov 2021

Needham

Maintains

Buy

Aug 2021

Jefferies

Downgrades

Buy

Hold

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Source: https://finance.yahoo.com/news/skywater-shares-soar-analyst-capable-175018064.html