Photronics, Inc. (NASDAQ:PLAB) — This semiconductor equipment company manufactures high-precision photomasks containing microscopic images of electronic circuits. These “masks” are then are used in the fabrication of semiconductors.
Standard & Poor’s’s opinion is a “Four-Star Buy” with a 12-month price target of $13 despite a decline in revenues of 7.8% in fiscal year 2016 (OCT). The buy rating is based on their assessment that revenues will rebound by 1.4% in FY 2017 and 19% in FY 2018.
They note that PLAB is gaining market share in the flat panel (high-end) displays and in the semiconductor markets. Analysts expect to have a 3D NAND ramp-up in the second half of FY 2017, which should directly benefit Photronics.
On February 15 S&P Capital raised their price target on Photronics by $1, their FY 2017 earnings per share estimate to 48 cents, up 4 cents, and their FY 2018 from 73 cents to 89 cents.
Technically PLAB stock is in a bull market, which was tested early in April when the stock reversed from under its 200-day moving average. The reversal was supported by higher-than-average volume and a buy signal from my internal indicator, the CBR. During the remainder of April, PLAB charged upward, breaking the 12-month resistance line at $11 and the triangle at $11.25, all on higher-than-average volume. Therefore this small-cap value stock appears to be a good buy at $11.50 for a trade to $13.50 for a possible return of 17%-plus before the end of the calendar year.
I suggest that investors seeking a long-term return with much higher potential consider purchasing PLAB stock for its high-growth potential market in China, where it will expand IC manufacturing capability.
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