Nova (NVMI) AI Stock Analysis

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Nova

(NASDAQ:NVMI)

Rating:79Outperform

Price Target:

$285.00

▲(3.10%Upside)

Nova's overall stock score is driven primarily by its strong financial performance and positive earnings call. The company's impressive revenue growth and strategic market positioning are significant strengths. Technical indicators suggest overbought conditions, and valuation metrics indicate a high market price expectation. Potential macroeconomic challenges and tariff impacts are risks to monitor.

Positive Factors

Financial Performance

Nova reported record service sales of $39.4 million, which were up 30.4% year-over-year.

Product Demand

The company sees robust demand in Gate-All-Around (GAA) and advanced packaging, reaffirming a target of $500M in GAA revenue by CY2026 with year-over-year growth.

Negative Factors

Geopolitical Factors

China sales, which constitute 39% of total sales, are mature nodes facing demand weakness due to leading-edge restrictions.

Market Reaction

The stock did not react well to a smaller earnings beat, as investors may believe this performance is 'as good as it gets' this cycle.

Nova (NVMI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$8.13B

Dividend YieldN/A

Average Volume (3M)262.37K

Price to Earnings (P/E)42.0

Beta (1Y)1.97

Revenue Growth41.03%

EPS Growth51.42%

CountryUS

Employees1,177

SectorTechnology

Sector Strength84

IndustrySemiconductors

Share Statistics

EPS (TTM)2.18

Shares Outstanding29,400,091

10 Day Avg. Volume289,030

30 Day Avg. Volume262,365

Financial Highlights & Ratios

PEG Ratio2.12

Price to Book (P/B)6.89

Price to Sales (P/S)0.00

P/FCF Ratio30.87

Enterprise Value/Market Cap0.85

Enterprise Value/Revenue2.66

Enterprise Value/Gross Profit16.17

Enterprise Value/Ebitda8.75

Forecast

1Y Price Target

$274.00

Price Target Upside-0.88% Downside

Rating ConsensusStrong Buy

Number of Analyst Covering6

Nova Business Overview & Revenue Model

Company DescriptionNova (NVMI) is a prominent company operating in the semiconductor industry, specializing in the development and manufacturing of advanced metrology solutions. These solutions are designed to enhance process control and yield in semiconductor manufacturing, providing critical insights into thin film measurements, materials characterization, and device structures. Nova's technology is utilized by leading semiconductor manufacturers worldwide, ensuring precision and efficiency in the production of semiconductors.

How the Company Makes MoneyNova generates revenue primarily through the sale of its metrology equipment and services to semiconductor manufacturers. The company's key revenue streams include the sales of advanced metrology systems, software solutions, and service contracts for maintenance and support. Additionally, Nova benefits from strategic partnerships and collaborations with leading semiconductor companies, which help drive product development and innovation. The company's focus on cutting-edge technology and its ability to adapt to the evolving needs of the semiconductor industry are significant factors contributing to its earnings.

Nova Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 37.72%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

Nova Limited reported a robust quarter with record revenue growth and strong market positioning. There were notable advancements in gate-all-around and advanced packaging solutions, and the company successfully expanded its facilities and completed an acquisition. However, macroeconomic uncertainties and tariff impacts pose potential challenges, particularly affecting gross margins and the China market outlook.

Q1-2025 Updates

Positive Updates

Record Revenue and Profitability

Nova achieved record results with a 50% year-over-year revenue growth and a 56% increase in non-GAAP EPS. The total revenues reached $213 million, marking the fourth consecutive quarter of all-time high revenues.

Strong Market Position

Nova's market share increased significantly in the thin-film and OCD metrology segment, becoming the second-largest vendor. This was validated by the Annual Gartner market share report.

Expansion in Gate-All-Around and Advanced Packaging

Significant revenue increase from gate-all-around and advanced packaging processes, with record sales in standalone solutions like the PRISM platform.

Record Software and Services Growth

The software business achieved record performance, with services revenues growing more than 30% year over year.

Successful Acquisition and Facility Expansion

Completion of the Sentronics acquisition and the opening of a new facility in Germany, doubling the capacity of Nova’s chemical metrology division.

Negative Updates

Macroeconomic Uncertainty

Global macroeconomic uncertainty and potential indirect implications of the current international trade climate could impact various sectors.

Tariff Impact on Margins

New tariffs could reduce gross margins by approximately 30 to 50 basis points, although the company is working on mitigation strategies.

Flat or Slight Decline in China Revenue

Despite a good backlog, nominal value from China business is expected to stay flat or slightly decline, with a lower share of revenue as advanced nodes become more prominent.

Company Guidance

During the Nova Limited First Quarter 2025 results conference call, the company reported record performance with revenues reaching $213 million, reflecting a 10% quarter-over-quarter and 50% year-over-year growth. Non-GAAP earnings per share (EPS) increased by 56% year-over-year. The gross margins were reported at 57% on a GAAP basis and 59.6% on a non-GAAP basis, surpassing the target model range of 57% to 60%. Operating expenses were $59 million on a GAAP basis and $53.5 million on a non-GAAP basis. The effective tax rate stood at approximately 15%. The company provided guidance for the second quarter with expected revenues between $210 million and $220 million, and non-GAAP EPS ranging from $1.96 to $2.14. The anticipated gross margins for the second quarter are approximately 56% on a GAAP basis and 58% on a non-GAAP basis. The company also highlighted its strategic positioning in advanced packaging and gate-all-around processes, projecting continued robust demand and market share growth despite macroeconomic uncertainties.

Nova Financial Statement Overview

Summary

Nova Limited demonstrates strong financial performance with impressive revenue and profit growth, high margins, and robust cash flow management. The balance sheet reflects a conservative leverage approach, adding to financial stability.

Income Statement

Very Positive

Nova has demonstrated impressive revenue growth, with a 29.8% increase from 2023 to 2024. The gross profit margin of 57.6% and net profit margin of 27.3% reflect strong profitability. Consistent EBIT and EBITDA margins of 27.9% and 34.7% respectively indicate operational efficiency. These metrics highlight Nova's robust growth and profitability in the highly competitive semiconductor industry.

Balance Sheet

Very Positive

The company maintains a solid balance sheet with a debt-to-equity ratio of 0.25, showcasing a conservative approach to leveraging. A return on equity of 19.8% indicates effective use of equity capital to generate profits. The equity ratio of 66.7% suggests substantial financial stability. Overall, Nova's balance sheet reflects strong financial health with low debt and high shareholder equity.

Cash Flow

Very Positive

Nova's free cash flow grew by 105.1% in 2024, evidencing strong cash generation capabilities. The operating cash flow to net income ratio of 1.28 demonstrates effective cash conversion from earnings. Furthermore, the free cash flow to net income ratio of 1.19 indicates robust free cash flow relative to profits, which supports reinvestment and shareholder returns. These metrics show Nova's strong cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	743.95M	672.40M	517.92M	570.73M	416.11M	269.40M
Gross Profit	426.13M	387.09M	293.18M	322.40M	237.36M	152.92M
EBITDA	231.46M	235.28M	172.41M	164.59M	121.32M	63.95M
Net Income	211.72M	183.76M	136.31M	140.21M	93.10M	47.91M
Balance Sheet
Total Assets	1.46B	1.39B	1.13B	984.11M	805.15M	655.79M
Cash, Cash Equivalents and Short-Term Investments	541.85M	586.57M	443.68M	373.50M	410.16M	423.87M
Total Debt	235.73M	236.10M	244.14M	246.06M	220.94M	214.42M
Total Liabilities	481.66M	462.63M	383.06M	397.14M	331.40M	284.25M
Stockholders Equity	982.12M	927.79M	750.75M	586.96M	473.75M	371.54M
Cash Flow
Free Cash Flow	220.13M	218.05M	106.34M	98.22M	127.45M	53.81M
Operating Cash Flow	243.40M	235.27M	123.53M	119.54M	132.26M	60.25M
Investing Cash Flow	-153.51M	-136.40M	-125.33M	-100.26M	-238.50M	-42.46M
Financing Cash Flow	-68.35M	-48.35M	10.00K	-29.81M	11.00K	181.41M

Nova Technical Analysis

Technical Analysis Sentiment

Positive

Last Price276.43

Price Trends

50DMA

213.30

Positive

100DMA

213.94

Positive

200DMA

208.68

Positive

Market Momentum

MACD

17.56

Negative

RSI

74.81

Negative

STOCH

82.54

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NVMI, the sentiment is Positive. The current price of 276.43 is above the 20-day moving average (MA) of 240.15, above the 50-day MA of 213.30, and above the 200-day MA of 208.68, indicating a bullish trend. The MACD of 17.56 indicates Negative momentum. The RSI at 74.81 is Negative, neither overbought nor oversold. The STOCH value of 82.54 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NVMI.

Nova Risk Analysis

Nova disclosed 51 risk factors in its most recent earnings report. Nova 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

Nova Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OLED	79 Outperform	$7.45B	32.60	14.58%	1.11%	6.13%	4.70%
NVMI	79 Outperform	$8.13B	41.97	23.87%	―	41.03%	51.42%
ONTO	77 Outperform	$4.90B	23.42	11.83%	―	21.23%	56.90%
CAMT	77 Outperform	$3.99B	33.11	24.82%	1.52%	32.63%	46.16%
AMKR	74 Outperform	$5.31B	16.84	7.76%	1.54%	-1.93%	-15.55%
Sector *	63 Neutral	$33.24B	5.92	-11.55%	1.90%	5.54%	-20.14%
ALGM	57 Neutral	$6.36B	―	-7.09%	―	-30.91%	-148.73%

* Technology Sector Average

Performance Comparison

NVMI

Nova

276.43

37.90

15.89%

AMKR

Amkor

22.30

-16.60

-42.67%

CAMT

Camtek

87.52

-44.73

-33.82%

ONTO

Onto Innovation

103.39

-125.00

-54.73%

OLED

Universal Display

161.44

-54.63

-25.28%

ALGM

Allegro MicroSystems

35.72

4.98

16.20%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 25, 2025