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SkyWater Shares Soar, Analyst Find It Capable Of Decoupling From Broader Semi Slowdown

Needham analyst Rajvindra Gill maintained a Buy rating on SkyWater Technology Inc (NASDAQ: SKYT) and set a price target of $20.00.

SKYT reported a solid quarter and guidance, with margins being the bright spot, Gill wrote in a Tuesday note titled "Can SkyWater Decouple From the Broader Semi Slowdown? We Believe So."

He highlighted ATS is the primary driver for the beat, growing 18% Q/Q and 57% Y/Y.

He further noted that Phase 2 of the Rad-Hard award worth $100 million (RH90).

He also emphasized the $36 million grant award to expand capacity in Florida for advanced packaging.

Wafer Service revenue grew 36% Y/Y due to better pricing and higher fab efficiency, he noted.

The gross margins inflect, growing to 16.8% above the 8% estimate due to volume, cost reduction, and fixed cost absorption, he added.

Gill believes SKYT is uniquely buffered to a broader semi-slowdown as ~2/3 of its revenue is tied to company R&D projects.

During a downcycle, companies invest in capacity for the inevitable upswing in the cycle.

Moreover, he was more confident that margins were breaking out and could expand in CY23.

Price Action: SKYT shares traded higher by 31.70% at $11.38 on the last check Tuesday.

Latest Ratings for SKYTDate

Firm

Action

From

To

Feb 2022

Needham

Maintains

Buy

Nov 2021

Needham

Maintains

Buy

Aug 2021

Jefferies

Downgrades

Buy

Hold

View More Analyst Ratings for SKYT

View the Latest Analyst Ratings

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