SkyWater Price Target Bumped By 33.3% As Q2 Revenue Reaches Significant Breakeven Point Leading To Operating Leverage

SkyWater Price Target Bumped By 33.3% As Q2 Revenue Reaches Significant Breakeven Point Leading To Operating Leverage
  • Needham analyst Ravindra Gill reiterated a Buy on SkyWater Technology, Inc SKYT and raised the price target to $20 from $15.
  • SkyWater reported 2Q22 revenues over the mid-$40 million level, reaching a significant breakeven point, he said in a note titled "Revenue Is Now Over Breakeven Point Translating to Operating Leverage."
  • He expected gross margins to improve through 2023 as inflation abates. 
  • SkyWater expects the ATS segment to account for 2/3 of revenue next quarter and targets a similar segment mix over the medium term, he highlighted.
  • He saw SKYT as a strong play on advanced domestic semiconductor manufacturing for crucial technologies like quantum computing, photonics, carbon nanotubes, power management, biomedical and MEMS devices. 
  • The benefits of the CHIPS Act are essentially a free call option, as he contemplated no incremental revenue or CapEx subsidies in the long-term growth rate of 25%. 
  • He raised the price target on a blended methodology off his FY23 estimates.
  • Price Action: SKYT shares traded higher by 32.70% at $18.91 on the last check Tuesday.

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