Please ensure Javascript is enabled for purposes of website accessibility

Why Amkor Technology Stock Jumped 34% Today

By Anders Bylund - Updated Oct 29, 2019 at 11:57AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The chip testing and packaging expert absolutely crushed Wall Street's expectations in the third quarter, then set up ambitious targets for the next report.

What happened

Shares of Amkor Technology (AMKR -3.37%) surged as much as 33.7% higher on Tuesday morning, following the release of surprisingly strong third-quarter results. At 11:25 a.m. EDT, the semiconductor chip packaging and testing specialist's stock had cooled down slightly to a 31.4% gain.

So what

Amkor's sales fell 5% year over year to $1.08 billion. Earnings decreased by 4%, landing at $0.23 per share. Your average analyst would have settled for earnings near $0.08 per share on sales in the neighborhood of $1.03 billion. The company saw strong demand for its advanced chip packaging technologies, including one very large order for an upcoming device launch in the consumer electronics industry. Management did not disclose the identity of that game-changing customer, nor do we know exactly what type of device these Amkor-packaged chips will power.

Digital rendering of a green charting arrow rising upward and crashing through the ceiling.

Image source: Getty Images.

Now what

Looking ahead, Amkor's management also set fourth-quarter revenue and earnings targets comfortably ahead of the current Wall Street view. A handful of analysts followed up with raised price targets and upgrades on Amkor shares.

The stock also rose 20% on solid second-quarter results in July. All told, Amkor's stock has delivered gains of 84% over the last 52 weeks. Even so, it's trading at a fairly reasonable 14 times free cash flow and 26 times forward earnings. Investors are assuming that the current string of calmly solid reports will turn into respectable growth as demand builds for underlying devices in key sectors such as the Internet of Things, 5G wireless networking, and the next generation of flagship smartphones. Amkor has a finger in all of these pies because their chips often require advanced packaging in order to fit into very tight spaces.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amkor Technology, Inc. Stock Quote
Amkor Technology, Inc.
$21.81 (-3.37%) $0.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.