20% Upside Seen For Cohu Shares As Needham Takes A Bullish View

Cohu, a supplier of semiconductor test and inspection handlers and other test modules, boasts the highest level of exposure to the growing Auto IC space, Mok commented in his upgrade note. In fact, auto IC sales are expected to consistently grow at a 4 to 6 percent rate over the next few years company's differentiated technical capabilities, especially in thermal, could result in new contract wins. Finally, Cohu's recently launched new products, including the WLCSP prober, inspection module, and system-level test solution, are individually small at around $10 million in sales each. However, these new products also represents a diversified product portfolio and exceed management's own conservative projections. Related Links: Marc Chaikin's Bullish Thesis On 3 Small-Cap Tech Stocks Cohu Launches Next Generation 32-Position Turret Handler

Cohu is also well positioned to gain market share in both handlers and contactors, which is the company's core business, Mok continued. Within the handlers segment, Cohu is winning new positions at a diversified Korean chip maker and at a new European Auto IC customer. and these wins alone will add approximately two points of handler share. Within the contactor segment, the company's exposure while small at $40 million or 11 percent of total sales, there is room for a 20 percent growth rate over the coming years (see Mok's track record here).

At time of publication, shares of Cohu were up 13.45 percent at $22.73.