ACMR - ACM Research: A Compelling Opportunity In The Booming Semiconductor Industry

2024-06-21 07:45:42 ET

Summary

• ACM Research is overlooked in the semiconductor space, in my opinion, despite operating in an integral part of the semiconductor supply chain.
• The wafer cleaning equipment market is forecasted to grow rapidly in the coming years due to growing chip demand.
• I expect ACM Research’s focus on advanced wet processing equipment will allow it to grow its market share in the coming years and reach its target of $1 billion in annual sales in 2026.
• ACM Research’s forecasted topline growth and economies of scale will expand its EBIT margin, in my opinion.
• My price target for ACM Research stock is $149 by 2028, representing 548% upside from the current valuation.

Although its stock is up nearly 96% YTD, ACM Research, Inc. ( ACMR ) remains an overlooked and undervalued investment in the semiconductor industry, in my view. I believe that is the case due to the company’s impressive topline growth as its revenues climbed 105% YoY in Q1, and management expects full year revenues to grow 23.2% YoY at the midpoint of the guidance. This rapid growth is mainly due to ACM Research offering wafer cleaning equipment. This process in semiconductor manufacturing is integral due to its positive impact on chip yield and performance.

With the semiconductor industry on track to rebound this year due to forecasted growth in smartphone and PC shipments, I believe ACM Research is well-positioned to continue its rapid topline growth. This is due to potential high demand for its equipment, as chip manufacturers will have to increase their production to meet demand. Additionally, nearly all of the company’s operations are in the world’s largest semiconductor market, China, where it has some of the nation’s largest foundries as customers....

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