Amtech Systems ASYS shares have gained 47.9% year to date (YTD), outperforming the Zacks Computer and Technology Sector and S&P 500 index’s return of 17.6% and 16.2%, respectively, YTD.
ASYS has also outperformed its Zacks Semiconductor - General industry peers, including Texas Instruments TXN, STMicroelectronics STM and Intel INTC. Shares of Texas Instruments have gained 18.8% YTD. Shares of STMicroelectronics and Intel have plunged 43.5% and 60.9% in the same time frame.
The outperformance of ASYS reflects investors’ confidence in the strong position of Amtech in its manufacturing business. Since Amtech manufactures a range of capital equipment and related consumables used in the production of semiconductors, silicon carbide and solar power technologies, the diversity strengthens investors’ confidence that the company will produce stable returns despite headwinds in some of its end markets.
ASYS Faces Mixed Demand for Its Products
Amtech develops advanced electronics systems for the automotive industry that support functions like advanced driver assistance systems, telematics and infotainment. ASYS has reported in its third-quarter 2024 earnings that it is experiencing an increased adoption of power electronic applications in hybrid and electric vehicles.
ASYS is also experiencing traction in its advanced packaging processors and high-performance computing, driven by increased utilization rates among outsourced semiconductor assembly and test companies and original equipment manufacturers.
However, ASYS is suffering from a decline in demand for its horizontal diffusion furnaces used in power electronic semiconductor applications for automotive and industrial markets. Amtech’s consumable products used in semiconductor fabrication are facing inconsistent demand.
Amtech Systems YTD Performance
Image Source: Zacks Investment Research
Amtech’s business is cyclical in nature, and it is currently going through a contraction cycle due to an extended cyclical downturn in personal computer and smartphone demand after the subsequent rise in demand for these electronic products during the pandemic. The company is also suffering from macroeconomic challenges like high inflation and rising interest rates, which are forcing its enterprise customers to delay their orders.
These factors have negatively impacted its top line. ASYS' top line is grappling with inconsistency and decelerated growth at present. For the fourth quarter of fiscal 2024, Amtech expects revenues in the range of $22-$25 million. The Zacks Consensus Estimate for revenues is pegged at $23 million, indicating a year-over-year decline of 17%.
Conclusion
Amtech is facing mixed demand for its products across its end markets, which is affecting its top-line growth. Amtech’s Value Style Score of C suggests that the stock has a stretched valuation at this moment. The stock’s Zacks Rank #3 (Hold) suggests that investors should wait for a better entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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