Wolfspeed, Entegris, FormFactor Shares Drop After Analyst Downgrade Citing Cyclical Downturn; Find Analyst's Top Picks
- Citigroup analyst Atif Malik downgrades Wolfspeed Inc (NYSE: WOLF) from Buy to Neutral and lowers the price target from $95 to $66.
- Though he remains optimistic about the growth of the silicon carbide market, he worries that other electric vehicle makers may follow Tesla Inc's (NASDAQ: TSLA) lead in offering lower-cost EV models using IGBT or hybrid IGBTSiC technologies.
- Malik downgrades Entegris Inc (NASDAQ: ENTG) from Buy to Neutral and lowers the price target from $92 to $86.
- Malik downgrades FormFactor Inc (NASDAQ: FORM) from Buy to Neutral and raises the price target from $25 to $33.
- The equipment group is +34% vs. SP500's +13% since early 4Q22, and Malik continues to believe the group bottomed in October last year.
- He believes the easy money phase is over. The cycle enters "Phase 2", where his stock-picking framework prefers equipment and component makers over consumable and wafer-start-driven stocks.
- Malik remains long on equipment with top picks Applied Materials, Inc (NASDAQ: AMAT) and Lam Research Corp (NASDAQ: LRCX).
- Malik's top component picks include Advanced Energy Industries, Inc (NASDAQ: AEIS) and Coherent Corp (NYSE: COHR).
- Malik expects the group to grind higher for three reasons.
- He cites the potential upside to 2024/25 WFE as multinational chipmakers in China pivot to add capacity outside China to avoid the risk of a possible expansion in equipment restrictions due to guardrails around U.S. Chip Act subsidies. The analyst further estimates revision momentum. Although valuations have expanded, they remain ~30% below the prior peak.
- Price Actions: ENTG shares traded lower by 5.83% at $77.22 on the last check Monday. WOLF shares traded lower by 5.40% at $61.44, and FORM shares traded lower by 3.80% at $30.64.
Latest Ratings for ENTG
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Feb 2022 | Mizuho | Upgrades | Neutral | Buy |
| Jan 2022 | Deutsche Bank | Upgrades | Hold | Buy |
| Jan 2022 | Seaport Global | Upgrades | Neutral | Buy |
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Posted-In: Briefs Expert IdeasAnalyst Color News Downgrades Price Target Analyst Ratings Tech
