Photronics PLAB shares have plunged 25.1% over the trailing 12 months, underperforming the Zacks Computer & Technology sector’s appreciation of 34.2%.
PLAB shares have underperformed broader sector peers, including Fujifilm FUJIY, Amphenol APH and Broadcom AVGO.
Over the same timeframe, shares of Fujifilm, Amphenol and Broadcom have appreciated 4.3%, 40.2% and 111%, respectively.
PLAB has been suffering from sluggish semiconductor industry trends, geopolitical uncertainty and macroeconomic headwinds. Soft revenues and higher operating expenses have kept operating margins under pressure.
In fiscal 2024, revenues fell 2.8% over fiscal 2023 to $866.9 million, with Integrated Circuits (IC) revenues down 2% and Flat Panel Displays (FPD) revenues declining 5%. Operating expenses increased 90 basis points (bps) year over year while operating margin expanded 30 bps.
Photronics, Inc. Price and Consensus
Photronics, Inc. price-consensus-chart | Photronics, Inc. Quote
However, Photronics’ fiscal 2025 prospects are bright, given the growing demand for its chips in AI, IoT, 5G and consumer products. Improving demand for advanced display technologies is expected to boost top-line growth.
Hence, investors should ask this question: is the dip the right time to invest in PLAB stock?
AI Proliferation to Aid PLAB’s Prospects
In the IC market strong demand for PLAB’s high-end chips that support AI is expected to drive growth. Requirement of higher number of layers and masks in complex advanced leading-edge nodes bodes well for Photronics’ prospects.
PLAB saw improved demand for its high-end ICs in the fourth quarter of fiscal 2024. It is benefiting from growing demand for leading-edge AI chips, which are driving multi-node mask demand.
In 2025, Photronics plans to spend $200 million, with a large focus on expanding U.S. multi-site capacity and capability to capture regional IC markets.
FPD is expected to benefit from growing demand for complex, high-end MOSFETs, which are needed to support AMOLED and LTPS mobile display manufacturing.
PLAB Offers Solid Q1 Guidance
Photronics expects first-quarter fiscal 2025 revenues between $208 million and $216 million.
Operating margin is expected between 23% and 25%.
Earnings are expected between 43 cents per share and 49 cents per share.
PLAB’s Earnings Estimate Revision Shows Upward Trend
For fiscal 2025, the Zacks Consensus Estimate for earnings is pegged at $2.30 per share, up 4.5% over the past 30 days. The figure indicates a 12.2% increase from the figure reported in the year-ago quarter.
PLAB’s earnings missed the Zacks Consensus Estimate in three of the trailing four quarters, beating in the remaining one, the average negative surprise being 3.47%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Here is Why PLAB Stock is a Strong Buy
We point out that Photronics shares are cheap, as suggested by the Value Score of A.
PLAB currently sports a Zacks Rank #1 (Strong Buy), which implies investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Free: See Our Top Stock And 4 Runners UpAmphenol Corporation (APH) : Free Stock Analysis Report
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Broadcom Inc. (AVGO) : Free Stock Analysis Report
Photronics, Inc. (PLAB) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
