Wolfspeed, Entegris, FormFactor Shares Drop After Analyst Downgrade Citing Cyclical Downturn; Find Analyst's Top Picks

Citigroup analyst Atif Malik downgrades Wolfspeed Inc WOLF from Buy to Neutral and lowers the price target from $95 to $66.
Though he remains optimistic about the growth of the silicon carbide market, he worries that other electric vehicle makers may follow Tesla Inc's TSLA lead in offering lower-cost EV models using IGBT or hybrid IGBTSiC technologies.
Malik downgrades Entegris Inc ENTG from Buy to Neutral and lowers the price target from $92 to $86.
Malik downgrades FormFactor Inc FORM from Buy to Neutral and raises the price target from $25 to $33.
The equipment group is +34% vs. SP500's +13% since early 4Q22, and Malik continues to believe the group bottomed in October last year.
He believes the easy money phase is over. The cycle enters "Phase 2", where his stock-picking framework prefers equipment and component makers over consumable and wafer-start-driven stocks.
Malik remains long on equipment with top picks Applied Materials, Inc AMAT and Lam Research Corp LRCX.
Malik's top component picks include Advanced Energy Industries, Inc AEIS and Coherent Corp COHR.
Malik expects the group to grind higher for three reasons.
He cites the potential upside to 2024/25 WFE as multinational chipmakers in China pivot to add capacity outside China to avoid the risk of a possible expansion in equipment restrictions due to guardrails around U.S. Chip Act subsidies. The analyst further estimates revision momentum. Although valuations have expanded, they remain ~30% below the prior peak.
Price Actions: ENTG shares traded lower by 5.83% at $77.22 on the last check Monday. WOLF shares traded lower by 5.40% at $61.44, and FORM shares traded lower by 3.80% at $30.64.

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