ACM Research ACMR shares have gained 13.9% in the past month, outperforming the broader Zacks Computer and Technology sector’s return of 7% and the Zacks Semiconductor Equipment - Material Services industry’s appreciation of 12.7%.

Over the same time frame, ACMR shares have outperformed its broader sector peers, including Lam Research Corporation LRCX, Applied Materials AMAT and Analog Devices ADI.

Shares of Lam Research Corporation, Applied Materials and Analog Devices have gained 4.5%, 7.3% and 2.3%, respectively, over the same time frame. The sector appreciated 7%.

The strong performance can be attributed to solid top-line growth, driven by higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment, ECP (front-end and packaging), furnace and other technologies.

ACMR Offers Positive Q3 and FY24 Guidance

For fiscal 2024, ACMR expects revenues between $695 million and $735 million compared with the previous outlook of $650-$725 million. This implies 28% year-over-year growth compared with 23% previously.

The Zacks Consensus Estimate for 2024 revenues is pegged at $727 million, indicating year-over-year growth of 30.3%.

ACM Research expects shipment in the year’s second half to grow with a full-year shipment growth rate, outpacing the first half of 2024 revenues of $355 million, up 62.1% from the year-ago figure.

It further broadens its revenue outlook and sets a new target of $3 billion, owing to solid progress in product launches and global market share gain, assuming that China will account for $1.5 billion and the rest of the world with another $1.5 billion.

For fiscal 2024, ACMR anticipates gross margin to be at the upper end of the target range of 40-45%.

The Zacks Consensus Estimate for earnings for fiscal 2024 is pegged at $1.63 per share, up by a couple of pennies over the past 60 days.

The Zacks Consensus Estimate for revenues for the third quarter of 2024 is pegged at $179.8 million, indicating year-over-year growth of 5.6%.

For the third quarter of 2024, the consensus mark for earnings is pinned at 28 cents per share, suggesting a year-over-year decline of 34.8%. This dropped 42% over the past 60 days.

Will Strong Portfolio Aid ACMR’s Prospects?

In the second quarter of 2024, revenues from single-wafer cleaning Tahoe and semi-critical cleaning products grew 36% and represented 76% of total revenues, while revenues for ECP front-end packaging furnace and other technologies were $39 million, which increased 103.8% from the year-ago quarter and represented 19% of total revenues.

ACM Research’s recent introduction of its Frame Wafer Cleaning Tool for advanced packaging, delivering high cleaning performance by using comparatively less sulfuric acid and hydrogen peroxide than conventional high-temperature single-wafer cleaning tools, might broaden its revenue prospects.

In the second quarter of 2024, revenues from Single wafer cleaning, Tahoe and semi-critical cleaning equipment were $153 million, up 35% from the year-ago quarter’s figure.

ACMR’s release of Ultra C bev-p panel bevel etching tool for fan-out panel-level packaging (FOPLP), designed for bevel etching and cleaning in copper-related processes, handling both the front and back sides of panel bevel etching, enhancing process efficiency and product reliability, is a notable development.

ACMR adds another product to its FOPLP portfolio, the Ultra C vac-p flux cleaning tool for removing flux residues from chiplet structures, thus making the stock lucrative.

ACMR’s launch of Panel Electrochemical Plating (Ultra ECP ap-p), featuring a horizontal plating approach achieving exceptional uniformity and precision across the entire panel, is a plus.

Shift to AI Aids ACMR’s Prospects

ACMR's transition to AI is pushing the market toward the ACM technology warehouse. The move to 3D architecture for NAND, DRAM and logic is increasing the demand for its vertical cleaning solutions, including TEBO and supercritical CO2 dry, as well as the proprietary furnace ALD design.

HBM requirements are driving demand for its TSV plating and 2.5D advanced packaging solutions.

ACM's track platform, designed to efficiently scan while requiring minimal maintenance, prioritizing high throughput might be a positive.

However, challenging macroeconomic conditions and persistent inflation are near-term concerns.

Zacks Rank and Valuation

ACMR shares are currently undervalued, as suggested by a Value Score of B.

However, it carries a Zacks Rank #4 (Sell), implying that investors should stay away from the stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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