B.Riley FBR analyst Dave Kang maintained a Buy rating on AXT Inc (AXTI) today and set a price target of $5.50. The company’s shares closed yesterday at $4.17, close to its 52-week low of $3.55.
Kang observed:
“While AXTI’s 2Q results were above consensus, its 3Q outlook of $24.5M-$26.0MM/$0.02-0.04 (ex-SBC) was below consensus of $26.5M/$0.06. The 2Q upside was largely due to a sizable order for InP (indium phosphide) from a major Asian customer (we believe it was Huawei), which may not repeat in 2H. InP for PON (Passive Optical Network) also increased in 2Q, but is expected to be down in 3Q, reflecting the lumpiness nature of this segment. Meanwhile, the datacenter demand, which has been muted in 1H as a result of excess channel inventories, is starting to improve. In GaAs (gallium arsenide), demand for LEDs is improving after a challenging 4Q/1Q. Due to the higher InP mix, GM improved from 33.3% in 1Q to 34.4% in 2Q. Nevertheless, as GaAs (LED) increases while InP contracts in 3Q, we believe GM could decline to 31%-32%.”
According to TipRanks.com, Kang is a 5-star analyst with an average return of 19.6% and a 64.4% success rate. Kang covers the Consumer Goods sector, focusing on stocks such as DASAN Zhone Solutions Inc, Applied Optoelectronics, and Acacia Communications.
Currently, the analyst consensus on AXT Inc is a Moderate Buy with an average price target of $6.25, which is a 49.9% upside from current levels. In a report released today, Northland Securities also maintained a Buy rating on the stock with a $7 price target.
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Based on AXT Inc’s latest earnings release for the quarter ending March 31, the company reported a quarterly GAAP net loss of $1.1 million. In comparison, last year the company had a net profit of $3.9 million.
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AXT, Inc. engages in the design, development, manufacture, and distribution of compound and single element semiconductor substrates. It also sells specialty material substrates and raw materials used to make substrates and other related products. The company was founded by Morris S. Young and Davis Zhang in December 1986 and is headquartered in Fremont, CA.
