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Onto Innovation (ONTO)
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Onto Innovation (ONTO) AI Stock Analysis

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ONTO

Onto Innovation

(NYSE:ONTO)

Rating:72Outperform
Price Target:
$105.00
▲(8.02% Upside)
Onto Innovation's strong financial performance and strategic corporate events significantly contribute to its score. However, technical analysis indicates potential short-term challenges, and valuation suggests moderate appeal. The earnings call provides a cautiously optimistic outlook amid some operational headwinds.
Positive Factors
Acquisition
Onto Innovation has entered into a definitive agreement to acquire the materials analysis business of Semilab International, which could enhance its market position.
Financial Performance
Onto Innovation reported a disappointing quarter with the official announcement of 2.5D share loss to KLAC.
Negative Factors
Market Share
A reduction in AI packaging share could mean the rapid de-rating of Onto Innovation over the past three months is unlikely to reverse in the near term.
Tariffs
Tariffs are expected to impact Onto's margins, prompting the company to shift some manufacturing operations to Asia.

Onto Innovation (ONTO) vs. SPDR S&P 500 ETF (SPY)

Onto Innovation Business Overview & Revenue Model

Company DescriptionOnto Innovation Inc. engages in the design, development, manufacture, and support of process control tools that performs macro defect inspection and 2D/3D optical metrology, lithography systems, and process control analytical software worldwide. It offers process and yield management solutions, and device packaging and test facilities through standalone systems for macro-defect inspection, packaging lithography, probe card test and analysis, and transparent and opaque thin film measurements; and process control software portfolio that includes solutions for standalone tools, groups of tools, and enterprise-or factory-wide suites. The company also provides spare parts and software licensing services. Its products are used by semiconductor and advanced packaging device manufacturers; silicon wafer; light emitting diode; vertical-cavity surface-emitting laser; micro-electromechanical system; CMOS image sensor; power device; RF filter; data storage; and various industrial and scientific applications. The company was formerly known as Rudolph Technologies, Inc. Onto Innovation Inc. was founded in 1940 and is headquartered in Wilmington, Massachusetts.
How the Company Makes MoneyOnto Innovation generates revenue through the sale of its metrology and inspection systems, which are crucial for semiconductor manufacturers to maintain high-quality production standards. The company also offers software solutions that enhance the efficiency and effectiveness of these systems. Key revenue streams include direct sales of equipment and software licenses, as well as service contracts for ongoing support and maintenance. Onto Innovation's earnings are bolstered by strategic partnerships with leading semiconductor manufacturers and technology firms, which help drive technological advancement and expand market reach. Additionally, the company benefits from the growing demand for semiconductors across various industries, including consumer electronics, automotive, and telecommunications.

Onto Innovation Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: -23.35%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted record-breaking revenue and growth driven by advanced nodes and metrology business expansion. However, challenges such as the impact of tariffs, a decline in specialty device and advanced packaging revenue, and a need for new inspection tools were noted. The expected Q3 low point in revenue adds to the concerns. Despite these challenges, the company's strong operating cash flow and strategic plans to mitigate tariffs present a mixed but cautious outlook.
Q1-2025 Updates
Positive Updates
Record-Breaking Revenue and Growth
Onto Innovation set another revenue record for the quarter, delivering $267 million in revenue, representing a 17% increase versus the prior year. First quarter EPS increased 28% versus the prior year.
Advanced Nodes Revenue Surge
Advanced nodes revenue increased 96% over Q4 to $93 million, representing 35% of revenue.
Strong Operating Cash Flow
A record operating cash flow of $92 million was achieved due to continued discipline in working capital management.
Successful Metrology Business Expansion
Record quarters were achieved for new products Iris films Metrology and IMPULSE 5 Integrated Metrology.
Negative Updates
Impact of Tariffs
Onto Innovation is negatively impacted by tariffs due to products manufactured in the U.S., affecting incoming costs and export tools. Strategic programs are being accelerated to improve resilience.
Specialty Device and Advanced Packaging Revenue Decline
Revenue from specialty device and advanced packaging markets declined 24% from Q4.
Challenges with 2.5D Packaging Tools
Current inspection tools did not fully address new sensitivity requirements, resulting in a need for a new inspection platform.
Expected Q3 Revenue Low Point
Q3 is anticipated to be a low point for the year, particularly due to a meaningful pause in memory investments.
Company Guidance
During the Onto Innovation First Quarter Earnings Release Conference Call, the company reported a record revenue of $267 million, driven by expansions in advanced nodes and packaging. Advanced nodes contributed $93 million, representing a 96% increase from the previous quarter and making up 35% of total revenue. Specialty devices and advanced packaging brought in $129 million, accounting for 48% of revenue, albeit with a 24% decline from Q4. Software and services generated $44 million, comprising 17% of revenue. The first quarter achieved a gross margin of 55%, aligning with the guidance range of 54% to 56%. Operating expenses for Q1 were $70 million, and operating income reached $76 million, representing 29% of revenue. Onto Innovation ended the quarter with $851 million in cash and short-term investments, executing $75 million in share buybacks. The company anticipates second-quarter revenue between $240 million and $260 million, with a gross margin of 54% to 56%. Operating expenses for Q2 are expected to be between $72 million and $75 million, with non-GAAP earnings projected at $1.21 to $1.35 per share.

Onto Innovation Financial Statement Overview

Summary
Onto Innovation demonstrates strong financial health with stable revenue growth, robust profitability margins, and efficient cash flow management. The balance sheet reflects low leverage, providing a solid foundation for future growth.
Income Statement
85
Very Positive
Onto Innovation shows strong profitability with a consistent increase in total revenue and net income over the years. The TTM gross profit margin is 51.48% and the net profit margin stands at 21.37%, indicating efficient cost management and strong profit generation. EBIT and EBITDA margins are also healthy at 20.37% and 24.84% respectively. Revenue growth rate from the previous annual report to TTM is 3.82%, showing a steady upward trend.
Balance Sheet
78
Positive
The company maintains a solid financial position with a low debt-to-equity ratio of 0.01 and a strong equity ratio of 90.77%, reflecting financial stability and low leverage. Return on equity (ROE) is robust at 11.40%, demonstrating effective utilization of equity. However, the high equity ratio might indicate underutilization of debt financing for growth opportunities.
Cash Flow
81
Very Positive
Onto Innovation exhibits strong cash flow management with a healthy operating cash flow to net income ratio of 1.28 and free cash flow to net income ratio of 1.13, suggesting efficient conversion of income into cash. The free cash flow growth rate from the previous year is 15.72%, highlighting robust cash generation capabilities.
BreakdownDec 2024Dec 2023Dec 2022Mar 2022Dec 2020
Income Statement
Total Revenue987.32M815.87M1.01B788.90M556.50M
Gross Profit515.31M420.25M539.22M429.09M278.45M
EBITDA249.41M183.29M301.38M222.21M94.25M
Net Income201.67M121.16M223.33M142.35M31.02M
Balance Sheet
Total Assets2.12B1.91B1.79B1.65B1.47B
Cash, Cash Equivalents and Short-Term Investments852.33M697.81M547.78M511.34M373.72M
Total Debt15.16M19.52M22.02M17.72M20.93M
Total Liabilities191.21M173.18M198.44M223.76M203.43M
Stockholders Equity1.93B1.74B1.60B1.43B1.26B
Cash Flow
Free Cash Flow213.77M149.40M118.30M163.24M102.16M
Operating Cash Flow245.68M171.97M136.70M175.28M105.98M
Investing Cash Flow-226.55M-103.39M-55.69M-141.79M-48.60M
Financing Cash Flow-35.67M-9.47M-68.35M2.67M-53.70M

Onto Innovation Technical Analysis

Technical Analysis Sentiment
Negative
Last Price97.20
Price Trends
50DMA
98.05
Negative
100DMA
108.50
Negative
200DMA
142.98
Negative
Market Momentum
MACD
-0.93
Positive
RSI
42.98
Neutral
STOCH
32.04
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ONTO, the sentiment is Negative. The current price of 97.2 is below the 20-day moving average (MA) of 98.86, below the 50-day MA of 98.05, and below the 200-day MA of 142.98, indicating a bearish trend. The MACD of -0.93 indicates Positive momentum. The RSI at 42.98 is Neutral, neither overbought nor oversold. The STOCH value of 32.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ONTO.

Onto Innovation Risk Analysis

Onto Innovation disclosed 38 risk factors in its most recent earnings report. Onto Innovation reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Onto Innovation Peers Comparison

Overall Rating
UnderperformOutperform
Sector (55)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
$7.75B40.0023.87%41.03%51.42%
76
Outperform
$4.03B35.7324.28%1.39%27.88%37.85%
72
Outperform
$4.64B20.3911.83%21.23%56.90%
66
Neutral
$3.17B-9.89%-20.08%-218.29%
55
Neutral
$292.18M11.21-16.41%2.78%10.38%-44.70%
55
Neutral
$4.13B-9.71%29.66%47.97%
53
Neutral
$5.78B-6.75%-18.82%-195.20%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ONTO
Onto Innovation
94.75
-69.25
-42.23%
CAMT
Camtek
88.35
2.88
3.37%
IPGP
IPG Photonics
74.63
8.62
13.06%
NVMI
Nova
263.48
82.52
45.60%
SLAB
Silicon Laboratories
126.76
32.45
34.41%
ALGM
Allegro MicroSystems
31.24
10.76
52.54%

Onto Innovation Corporate Events

M&A Transactions
Onto Innovation Acquires Semilab USA for $475 Million
Positive
Jun 30, 2025

On June 27, 2025, Onto Innovation Inc. announced an agreement to acquire Semilab USA for $475 million in cash and shares, with the transaction expected to close in the second half of 2025. This acquisition is anticipated to add over $130 million to annual revenue, enhance Onto Innovation’s market position in high-growth semiconductor segments, and be immediately accretive to margins and earnings per share.

The most recent analyst rating on (ONTO) stock is a Buy with a $260.00 price target. To see the full list of analyst forecasts on Onto Innovation stock, see the ONTO Stock Forecast page.

Executive/Board ChangesBusiness Operations and Strategy
Onto Innovation Appoints New CFO Brian Roberts
Positive
Jun 16, 2025

On June 12, 2025, Onto Innovation Inc. announced the appointment of Brian Roberts as the new Chief Financial Officer, effective June 16, 2025. Roberts brings extensive experience from his previous roles, including CFO at Sensata Technologies and CEO at Tarveda Therapeutics. His employment agreement includes a base salary, bonus incentives, equity grants, and severance benefits, reflecting Onto Innovation’s strategic focus on strengthening its financial leadership and operational stability.

The most recent analyst rating on (ONTO) stock is a Buy with a $260.00 price target. To see the full list of analyst forecasts on Onto Innovation stock, see the ONTO Stock Forecast page.

Executive/Board Changes
Onto Innovation Announces CFO Departure Effective Immediately
Neutral
Jun 12, 2025

On June 12, 2025, Onto Innovation, Inc. announced the mutual termination of employment with its Chief Financial Officer, Mr. Mark Slicer, effective immediately. The separation was amicable and not due to any disagreements regarding the company’s operations, policies, or practices.

The most recent analyst rating on (ONTO) stock is a Buy with a $260.00 price target. To see the full list of analyst forecasts on Onto Innovation stock, see the ONTO Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Onto Innovation Holds 2025 Annual Stockholder Meeting
Neutral
May 21, 2025

Onto Innovation held its 2025 Annual Meeting on May 21, 2025, in Milpitas, California, where stockholders voted on three key proposals. The stockholders elected seven directors to serve until the next annual meeting, approved executive compensation on an advisory basis, and ratified Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending January 3, 2026.

The most recent analyst rating on (ONTO) stock is a Buy with a $260.00 price target. To see the full list of analyst forecasts on Onto Innovation stock, see the ONTO Stock Forecast page.

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: Aug 01, 2025