Why Axcelis Technologies Is Poised For Superior Growth: BofA Initiates With Buy Rating

BofA Securities analyst Duksan Jang initiated coverage on the shares of Axcelis Technologies, Inc. ACLS with a Buy rating and a price target of $225.

The analyst believes that the Street is underappreciating exposure to some of the fastest growing semis end markets, share gains in a rising $3 billion TAM and superior growth prospects over semi cap peers.

ACLS is a key beneficiary of emerging trailing-edge auto/industrial applications, and the analyst believes it has the potential to expand its share to 35% by CY25E, up from 28% in CY22.

Implant TAM should grow 10-15% CAGR, driven by rising and sustained demand for trailing-edge (older) processes, said the analyst.

Specifically, according to the analyst, the silicon carbide device market, where ACLS has the highest exposure, should grow >30% CAGR on strong demand visibility/ backlogs for emerging EV/power device tools.

ACLS is the 2nd largest implant provider (28% share) and is quickly gaining share via focus (100% of tool sales) and wide breadth of portfolio, noted the analyst.

While the analyst acknowledges ACLS stock has risen 120%+ YTD, it still trades at 19-20x CY24E earnings, below peers at 22x. 

The analyst believes ACLS should trade at the high-end of peers (16x-29x), given continued share gains and industry outgrowth.

Concentration of 30% - 50% of tool sales in China, deceleration of implant TAM and consumer weakness are seen as risks. 

The analyst thinks ACLS should trade at the high-end of peers (16x-29x), given continued share gains and industry outgrowth.

Price Action: ACLS shares are trading lower by 6.06% at $168.04 on the last check Friday.