Needham Thinks Tower Semiconductor’s Stock is Going to Recover


In a report released today, Rajvindra Gill from Needham maintained a Buy rating on Tower Semiconductor (NASDAQ: TSEM), with a price target of $28. The company’s shares opened today at $19.53, close to its 52-week low of $19.19.

Gill commented:

“Year-to-date, TSEM has significantly underperformed relative to the SOX (TSEM -43% vs. SOX -2%), but we contend the stock is bottoming out. In this note, we highlight several positive press releases around automotive sensors, military and space. The automotive segment is one of the largest growth drivers in the Analog IC market and TSEM is well-positioned to capitalize on this secular trend. We believe the RF smartphone segment (20% of sales) is bottoming out and that consensus estimates are calibrated appropriately. Moreover, we should see a significant ramp in SiGe capacity in 4Q, which would lead to a higher margin profile exiting the year. Trading at close to 10x P/E 2019E, we would be buyers at these levels in anticipation of a 2H18 ramp and good setup heading into 2019.”

According to TipRanks.com, Gill is a 5-star analyst with an average return of 15.1% and a 55.4% success rate. Gill covers the Consumer Goods sector, focusing on stocks such as Everspin Technologies Inc, Smart Global Holdings Inc, and Adesto Technologies Corp.

Tower Semiconductor has an analyst consensus of Strong Buy, with a price target consensus of $30.20, representing a 54.6% upside. In a report issued on October 9, Jefferies also initiated coverage with a Buy rating on the stock with a $30 price target.

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Tower Semiconductor’s market cap is currently $1.92B and has a P/E ratio of 7.17. The company has a Price to Book ratio of 1.75.

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Tower Semiconductor Ltd. engages in the manufacture of integrated circuits. Its products include semiconductors and integrated circuits used in consumer electronics, personal computers, communications, automotive, industrial, and medical device products. The company was founded in 1993 and is headquartered in Migdal Haemek, Israel.

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