Ichor Holdings (ICHR) AI Stock Analysis

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Ichor Holdings

(NASDAQ:ICHR)

50Neutral

Ichor Holdings presents a mixed picture, with solid revenue growth and strategic advancements in proprietary products underscored by challenges in profitability and technical downtrends. Despite optimistic guidance and a strong equity base, the company's current financial metrics and bearish stock movements warrant a cautious outlook.

Positive Factors

NAND Market Demand

Improved visibility on NAND market demand is seen as a positive factor for ICHR.

Revenue Growth

Revenue growth is accelerating, outpacing analyst and consensus expectations.

Negative Factors

Gross Margin and Earnings Shortfall

Costs are accelerating, contributing to a Q4 gross margin and earnings per share shortfall.

Gross Margin Pressures

Near-term gross margin pressures from inventory charges and higher labor costs could weigh on ICHR's financial results.

Ichor Holdings (ICHR) vs. S&P 500 (SPY)

Market Cap

$712.28M

Dividend YieldN/A

Average Volume (3M)370.51K

Price to Earnings (P/E)―

Beta (1Y)2.13

Revenue Growth4.68%

EPS Growth55.72%

CountryUS

Employees1,820

SectorTechnology

Sector Strength45

IndustrySemiconductors

Share Statistics

EPS (TTM)-0.65

Shares Outstanding34,112,965

10 Day Avg. Volume435,237

30 Day Avg. Volume370,510

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.07

Price to Cash Flow (P/CF)-90.90

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$39.67

Price Target Upside85.98% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Ichor Holdings Business Overview & Revenue Model

Company DescriptionIchor Holdings, Ltd. engages in the design, engineering, and manufacture of fluid delivery subsystems and components for semiconductor capital equipment. It primarily offers gas and chemical delivery systems and subsystems that are used in the manufacturing of semiconductor devices. The company's gas delivery subsystems deliver, monitor, and control gases used in semiconductor manufacturing processes, such as etch and deposition; and chemical delivery subsystems blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes comprising chemical-mechanical planarization, electroplating, and cleaning. It also manufactures precision machined components, weldments, electron beam, laser-welded components, precision vacuum and hydrogen brazing, surface treatment technologies, and other proprietary products for use in fluid delivery systems. The company primarily markets its products directly and through resellers to equipment OEMs in the semiconductor equipment market in the United States, the United Kingdom, Singapore, Malaysia, Korea, Mexico, and internationally. Ichor Holdings, Ltd. was incorporated in 1999 and is headquartered in Fremont, California.

How the Company Makes MoneyIchor Holdings generates revenue primarily through the sale of its fluid delivery subsystems and components to semiconductor equipment manufacturers. These products are essential in the semiconductor fabrication process, as they ensure precise and reliable delivery of critical gases and chemicals. Ichor's revenue model is largely based on long-term partnerships and contracts with leading semiconductor equipment companies, benefiting from the consistent demand for advanced semiconductor fabrication technology. Additionally, the company invests in research and development to expand its product offerings and maintain a competitive edge in the market.

Ichor Holdings Financial Statement Overview

Summary

Ichor Holdings faces profitability challenges with negative net income and EBIT, impacting its financial performance. While revenue shows modest growth, the company is effectively managing its debt and improving cash flow generation. Overall, the financial stability is supported by a strong equity base, though profitability remains a concern.

Income Statement

Neutral

Ichor Holdings shows declining profitability with a negative EBIT and net income in the latest TTM period, indicating operational challenges. The gross profit margin stands at 11.67%, and net profit margin is negative, reflecting ongoing issues in cost management and revenue generation. However, there is a slight revenue growth of 4.68% from the previous year, which is a positive sign.

Balance Sheet

Neutral

The company maintains a solid equity position with an equity ratio of 70.15%. The debt-to-equity ratio has improved due to reduced total debt, indicating better leverage management. However, the return on equity is negative due to negative net income, highlighting profitability concerns.

Cash Flow

Neutral

Operating cash flow is positive, and free cash flow is growing, indicating improvements in cash management. The operating cash flow to net income ratio is negative due to the net loss, but the free cash flow to net income ratio is positive, suggesting potential for future profitability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
849.04M	811.12M	1.28B	1.10B	914.24M
	Gross Profit
103.33M	103.40M	211.86M	177.48M	124.89M
	EBIT
-7.64M	-10.89M	85.82M	81.01M	41.55M
	EBITDA
-7.64M	22.88M	121.49M	106.20M	65.28M
	Net Income Common Stockholders
-20.82M	-42.98M	72.80M	70.90M	33.28M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
108.67M	79.95M	86.47M	75.50M	252.90M
	Total Assets
995.56M	938.48M	1.08B	1.02B	774.17M
	Total Debt
53.18M	286.33M	341.74M	322.74M	210.67M
	Net Debt
-55.49M	206.38M	255.27M	247.25M	-42.23M
	Total Liabilities
297.23M	373.80M	496.25M	520.16M	362.48M
	Stockholders Equity
698.34M	564.68M	587.50M	500.71M	411.69M
Cash Flow		Free Cash Flow
10.24M	42.14M	2.02M	-5.31M	27.96M
	Operating Cash Flow
27.88M	57.63M	31.45M	15.53M	38.26M
	Investing Cash Flow
-17.64M	-15.50M	-28.93M	-289.85M	-14.60M
	Financing Cash Flow
18.47M	-48.65M	8.46M	96.91M	168.62M

Ichor Holdings Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price21.33

Price Trends

50DMA

25.18

Negative

100DMA

28.31

Negative

200DMA

29.68

Negative

Market Momentum

MACD

-1.86

Negative

RSI

49.69

Neutral

STOCH

63.48

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ICHR, the sentiment is Neutral. The current price of 21.33 is above the 20-day moving average (MA) of 19.39, below the 50-day MA of 25.18, and below the 200-day MA of 29.68, indicating a neutral trend. The MACD of -1.86 indicates Negative momentum. The RSI at 49.69 is Neutral, neither overbought nor oversold. The STOCH value of 63.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ICHR.

Ichor Holdings Risk Analysis

Ichor Holdings disclosed 36 risk factors in its most recent earnings report. Ichor Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Ichor Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IMOS	66 Neutral	$572.60M	13.16	5.63%	5.36%	3.24%	-26.85%
UCTT	62 Neutral	$1.00B	42.81	2.77%	―	20.92%	―
Sector *	59 Neutral	$10.59B	10.09	-6.37%	3.05%	7.44%	-10.67%
ICHR	50 Neutral	$712.28M	―	-3.30%	―	4.68%	55.72%
COHU	48 Neutral	$784.20M	―	-7.73%	―	-36.86%	-351.11%
AOSL	47 Neutral	$574.18M	―	-2.57%	―	4.12%	-29.74%
AAOI	41 Neutral	$707.83M	―	-84.12%	―	14.57%	-139.27%

* Technology Sector Average

Performance Comparison

ICHR

Ichor Holdings

21.33

-18.02

-45.79%

AOSL

Alpha and Omega

19.43

-2.76

-12.44%

IMOS

ChipMOS Technologies

16.09

-11.44

-41.55%

COHU

Cohu

16.88

-14.20

-45.69%

UCTT

Ultra Clean Holdings

22.49

-19.47

-46.40%

AAOI

Applied Optoelectronics

12.56

1.71

15.76%

Ichor Holdings Earnings Call Summary

Earnings Call Date: Feb 4, 2025 | % Change Since: -24.39% | Next Earnings Date: May 5, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive outlook with strong revenue growth and demand, particularly in proprietary products and strategic market segments. However, challenges remain with gross margin pressures and increased operating expenses.

Highlights

Record Revenue Growth in Q4

Q4 revenue reached $233 million, exceeding expectations and marking a 10% sequential increase. Annual revenue for 2024 was $849 million, up 5% from 2023.

Strong Demand and Market Outlook

Customer demand strengthened in Q4, with significant growth anticipated in Etch and CVD applications, advanced logic, DRAM markets, and a recovery in NAND technology investments.

Proprietary Product Qualifications

Ichor successfully qualified high-purity valves with a second customer and is progressing with a third. Proprietary fittings and substrates have also been qualified by major customers.

Debt Reduction

Total debt reduced to $129 million at year-end, down from $250 million a year ago, with a net-debt coverage ratio decline to 1.6 times.

Lowlights

Gross Margin Decline

Gross margin fell to 12% in Q4, below expectations by 300 basis points, primarily due to higher direct labor costs and inventory charges.

Higher Operating Expenses Projected

Q1 operating expenses are projected to increase to $23.5 million, partly due to seasonal payroll taxes and variable compensation costs.

Inventory and Labor Cost Headwinds

Higher-than-expected inventory charges and direct labor costs impacted Q4 results, with some residual impacts expected in Q1 of 2025.

Company Guidance

During the Ichor Fourth Quarter and Fiscal Year 2024 Earnings Conference Call, the company provided guidance that reflected optimism for 2025, with expected revenue in the range of $235 million to $255 million for Q1. Gross margins are projected to improve, reaching 14% to 15% in Q1, with expectations of exceeding 16% for the full year. The company highlighted a 25% to 30% flow-through, with contributions from new proprietary products such as high-purity valves and next-generation gas panels set to drive margin expansion. Operating expenses for Q1 are anticipated to be around $23.5 million, with net interest expense for the year expected to be approximately $6 million. The non-GAAP effective tax rate for 2025 is projected at 12.5%, with Q1 EPS expected between $0.20 and $0.32. Overall, the company is preparing for a strong growth year, driven by increasing demand in etch and deposition applications, and a favorable mix in wafer fab equipment demand.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.