Hong Kong based equity researcher The Woo Group believes new technologies developed by Ultratech will significantly boost earnings.
Jul. 24, 2013 - HONG KONG -- Ultratech (NASDAQ:UTEK) is a small company that produces a range of semiconductor related products; the management identifies gaps in the market, and looks to take market share. Their core business is in advanced packaging lithography, which is the case where the semiconductor is housed. These cases protect the chip from impact and corrosion. Ultratech currently holds nearly 80% of the market share, and has been the market leader for the last decade.
“Demand is constantly increasing in this sector as technology advances, demand for more advanced packaging increases as well. The stock is clearly undervalued at the current price” said Anthony Scott, Technology Analyst at The Woo Group in Hong Kong.
Another important operating sector for Ultratech is annealing. Silicon wafers are annealed, meaning that they are heated in order to modify the electrical properties of the semiconductor. Traditionally this process was done in furnaces, but Ultratech is developing laser spike annealing. This process allows the material to be heated to a much hotter temperature in far less time, it is integral for the manufacturing of smaller semiconductors.
The semiconductor industry is extremely cyclical, and Ultratech is nearing the bottom and approaching the upswing. Ultratech officials have recently stated the company expects a two quarter slow down as problems have occurred with the production of the Company’s first generation new types of semiconductor. Manufacturers are therefore hesitant.
“Whichever new product they choose, it is irrelevant for Ultratech, as their systems will be needed no matter what decision is made, so this slowdown can be seen as a temporary window of opportunity for investment” said Dr. Lian Cheung, Head of Investment Analysis.
“Recently there have been a number of acquisitions in the semiconductor equipment sector, and I believe that Ultratech will receive purchase offers from larger competitors especially if their laser spike annealing technologies become the industry standard. I am expecting them to hit their upswing early next year with share prices increasing more than 40% from their current prices. I will be recommending my clients to buy in the coming weeks as Ultratech has not quite reached the bottom of their cycle, said Dr Lian Cheung.
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