Tower Semiconductor (TSEM) PT Raised to $165 at Benchmark

Benchmark analyst Cody Acree raised the price target on Tower Semiconductor (NASDAQ: TSEM) to $165.00 (from $150.00) while maintaining a Buy rating.

The analyst commented, "Tower’s shares sold off moderately in Wednesday’s trading although the company continued to deliver on its multi-quarter streak of increasingly strong results. Tower, posted another solid quarter and outlook, led by strength in its AI Data Center levered RF Infrastructure segment, with particular growth in its Silicon Photonics business, where the company holds a dominant market share of about 85%. As Tower is well known for its high degree of visibility, with virtually 100% of any given quarter booked during prior periods, the company’s December quarter results were once again relatively in-line with its forecast, with revenue of $440 million, representing 14% annual and 11% sequential growth, coming in about a half-a-million ahead of the consensus. Further, with a second quarter of a greater than 55% incremental margin, the company’s adjusted bottom line of $0.78 handily beat our estimate and the Street consensus by $0.10. On expected continued demand momentum across its RF Infrastructure business for AI Data Center buildouts, Tower guided to March quarter revenue of $412 million, about $4 million ahead of our estimate and the consensus of $408 million. While no EPS guidance was given, as is Tower’s typical MO, our model estimates a Q1 bottom line of about $0.56, or about a penny above the consensus. We note that Tower’s Q4 gross margin increased 320 basis points sequentially and 430 bps year-over-year, driven by the growth of its high-margin RF Infrastructure business. Going forward, we expect the company’s incremental margins to continue to average higher from their 55% Q4 results, driven by the outsized growth of its high-margin optical infrastructure product segment. Tower further indicated that its March quarter guidance was expected to be its seasonal trough for the year, with sequential revenue and profit growth projected throughout FY26."

You May Also Be Interested In

• Susquehanna Downgrades Canadian National Railway (CNI) to Neutral
• Sibyane Stillwater (SBSW) PT Lowered to $12 at BMO Capital
• Wolfe Research on Bank of America (BAC): 'we expect shares to lag modestly in today’s session'