On Thursday, Craig-Hallum upgraded shares of Entegris Inc (NASDAQ: NASDAQ:ENTG) from Hold to Buy, significantly increasing the price target to $150 from $90. The firm cited Entegris' solid fourth-quarter results and the company's guidance for 2024, which includes high-single-digit organic topline growth and an EPS of approximately $3.25.
Entegris, a key player in the semiconductor sector, has taken a cautious industry outlook for 2024, projecting about 4% market growth. This estimate comprises approximately 5% growth in the unit-driven business and a stable capex-driven business. Despite this conservative market outlook, management is confident in outperforming the market by 4%-5%, which would result in high-single-digit organic growth for the year.
The company has also updated its longer-term financial model following the completion of several non-core divestitures. Entegris is now targeting a revenue of around $4.2 billion by 2026, which would represent an approximate 11% organic compound annual growth rate (CAGR) from 2023. Additionally, the company aims for an EPS greater than $5.00 by the same year.
Craig-Hallum's optimistic stance is further bolstered by the belief that Entegris is well-positioned to capitalize on the increasing complexity of semiconductors. The firm expects the company's content per wafer, which supports manufacturing requirements, to continue to expand, driving above-market growth.
The upgrade and new price target are based on a 30x multiple of the company's projected $5.00+ EPS in 2026, reflecting confidence in Entegris' business trajectory and its ability to achieve long-term financial goals. The firm's analysis suggests a strong potential for Entegris to perform well in the coming years.
InvestingPro Insights
Following the upbeat assessment by Craig-Hallum, data from InvestingPro provides a detailed financial perspective on Entegris Inc (NASDAQ: ENTG). With a market capitalization of $19.7 billion, the company's valuation is under the microscope, especially given its high P/E ratio, which stands at 108.19 as of the last twelve months ending Q4 2023. This reflects a market expectation of continued earnings growth, aligning with an InvestingPro Tip that Entegris' net income is expected to grow this year.
Another InvestingPro Tip highlights that Entegris is trading near its 52-week high, with the price at 97.45% of this peak. This suggests strong market confidence in the company, supported by a 51.34% one-year price total return. Such performance is indicative of the company's robust positioning in the semiconductor industry and the optimism surrounding its growth prospects.
From a profitability standpoint, Entegris has demonstrated a solid gross profit margin of 42.73% over the last twelve months as of Q4 2023, with an operating income margin of 12.19%. These metrics underscore the company's effective cost management and its ability to translate revenues into profits. Investors looking for additional insights can find more InvestingPro Tips on Entegris, including information on shareholder yield and liquidity analysis, by visiting https://www.investing.com/pro/ENTG. There are 14 additional tips available on InvestingPro, which can be accessed with an exclusive 10% discount using the coupon code PRONEWS24 on a yearly or biyearly Pro and Pro+ subscription.
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