Cohu To Sell Printed Circuit Board Test Unit For $125M

Back-end semiconductor equipment and services provider Cohu Inc. (COHU) has agreed to sell its Printed Circuit Board Test Group (PTG) business to Swedish production equipment provider Mycronic AB for a total consideration of $125 million.

The PTG business includes atg Luther & Maezler GmbH and other associated units. The transaction is expected to close by the end of June.

Cohu expects after-tax proceeds of $95 to $100 million from this transaction. It plans to use these funds to repay outstanding principal on its term loan facility.

The divested PTG unit had sales of $52.9 million over the past year. (See Cohu stock analysis on TipRanks)

Cohu President and Chief Executive Officer Luis A. Muller said, “PTG has been a valued part of our business since joining Cohu with the Xcerra acquisition in 2018, and I want to thank all employees for their contributions to the company.”

Muller added, “Combining forces with Mycronic creates additional scale in the PCB market segment and greater opportunities for PTG’s success in the future, while enabling Cohu to focus on semiconductor equipment and services businesses.”

On April 30, Needham analyst Quinn Bolton reiterated a Buy rating on the stock and maintained a $55 price target (41.5% upside potential).

Commenting on Cohu’s Q1 results, Bolton said, “Cohu reported solid results for 1Q21 that slightly beat our estimates, and guided 2Q21 revenue up sequentially and in line with our estimate. However, the company guided net gain gross margin down sequentially by 310 basis points.”

Bolton explained, “Investors should not interpret the lower GM guidance as weakness of the company but as strength of the market. Looking ahead to 2022, we expect gross margin will recover as mix shifts back to a more normalized range.”

Based on 6 unanimous Buys, consensus on the Street is that Cohu is a Strong Buy. The average analyst price target of $62.40 implies 60.6% upside potential. Shares have seen about 162.6% gain over the past year.

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