Balanced Risk/Reward Keeps Richardson Electronics at Hold Despite Revenue Beat and Backlog Uncertainty

Analyst Bobby Brooks of Northland Securities maintained a Hold rating on Richardson Electronics, retaining the price target of $12.00.

Bobby Brooks has given his Hold rating due to a combination of factors related to Richardson Electronics’ recent performance and underlying trends. While quarterly revenue came in ahead of his forecast, this outperformance was largely driven by stronger-than-expected results in the GES and Canvys segments, and did not translate into meaningful upside in profitability, as EBITDA and EPS both fell short of his estimates. He also observed that corporate gross margins were slightly weaker than projected, reflecting pressure in key segments, and that free cash flow usage was higher than he had modeled, indicating limited near-term financial leverage.

At the same time, Brooks is cautious about sustainability of growth in GES, noting that despite solid sales, the segment’s overall backlog has now declined in multiple recent quarters, which tempers his confidence in future revenue visibility. Although total company backlog ticked up modestly on strength in PMT, he sees the mixed pattern across segments and the project-driven nature of GES as reasons to wait for clearer and more durable backlog expansion before turning more positive. Given this combination of a top-line beat, modest operational underperformance, and lingering uncertainty around backlog and growth durability, he believes the risk/reward profile is balanced, supporting his decision to maintain a Hold rating on the shares.

Brooks covers the Industrials sector, focusing on stocks such as Graham, Tetra Technologies, and Ceco Environmental. According to TipRanks, Brooks has an average return of 44.7% and a 72.87% success rate on recommended stocks.