On Friday, Craig-Hallum upgraded shares of Cohu (NASDAQ:COHU) from Hold to Buy, with a price target (PT) of $30.00. The semiconductor test equipment supplier is witnessing an improving market environment, with bookings growing sequentially across all end markets and year-over-year in all except the consumer segment. This progress comes after the company faced multiple challenging years.
Cohu is now able to provide revenue guidance for multiple quarters ahead, projecting a 10% sequential increase for the first quarter of 2025. The company has also identified new growth opportunities, particularly in the inspection metrology of high bandwidth memory (HBM) for stacked die inspection.
A major U.S. memory customer has selected Cohu for this solution, which could become a strong multiyear revenue stream, with an estimated total addressable market (TAM) of approximately $100 million.
Moreover, Cohu has secured orders from a leading European customer for handling and inspecting silicon carbide (SiC) singulated die burn-in tests. The company anticipates that its SiC solution could represent a $50 million opportunity over time. Despite a more conservative outlook for 2025, the analyst remains positive about Cohu's fundamental prospects.
The company's shares are currently trading at the lower end of the past four years' range, which has fluctuated between approximately $25 and $50. The maintained $30 price target is based on 17 times the firm's 2026 earnings per share estimate of $1.75. Cohu also boasts a strong cash position, with $5.55 per share in net cash.
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