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Why Ichor Holdings Ltd. Stock Jumped 13% Today

By Anders Bylund - Oct 10, 2017 at 4:05PM

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One well-respected analyst firm brightened its outlook for the maker of semiconductor manufacturing tools.

What happened

Shares of Ichor Holdings (ICHR -14.36%) jumped as much as 12.7% higher on Tuesday, boosted by analyst firm Deutsche Bank raising its price target for the stock.

So what

Deutsche analyst Sidney Ho lifted his target price for Ichor from $26 to $32, citing a large new contract and a generally more favorable spending environment for semiconductor manufacturing tools. Ho also liked Ichor's recent acquisition of Cal-Weld, a $50 million deal that adds gas delivery tools to Ichor's core competency in fluid management systems.

A semiconductor wafer in middle of its production process.

Image source: Getty Images.

Now what

At $32, Deutsche Bank's value estimate is the highest price target among the five up-to-date Wall Street views I was able to find. Ichor holdings is trading above the current Street consensus of $29 per share, having soared 174% higher so far in 2017 and tripling since last December's IPO.

Ichor's strong market performance is supported by positive earnings and cash flows, not to mention 67% year-over-year revenue growth in the recently reported second quarter. The company is enjoying strong orders from major semiconductor makers, which is great news for Ichor itself, but also a positive signal for the chip industry at large.

This stock is still trading at bargain prices, even after the fantastic gains mentioned above. Ichor shares can be bought for 10.6 times forward earnings and 14.4 times trailing EBITDA profits, which looks like a great deal next to the company's proven growth chops.

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Stocks Mentioned

Ichor Holdings, Ltd. Stock Quote
Ichor Holdings, Ltd.
ICHR
$22.25 (-14.36%) $-3.73

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