Update shared on 19 Nov 2025
Ultra Clean Holdings' analyst price target has increased by $5 to $35. Analysts cite the company's Q3 earnings beat, improved gross margins, and normalized inventories as drivers for their raised expectations.
Analyst Commentary
Following the recent earnings results and operational updates, analysts have provided additional commentary highlighting both opportunities and potential challenges for Ultra Clean Holdings.
Bullish Takeaways- Bullish analysts note the company's outperformance in Q3 earnings and significant improvement in gross margins. This strengthens confidence in its operational execution.
- The normalization of inventories at the company's top customers is expected to enable quicker revenue realization when the wafer fabrication equipment industry moves into an upcycle.
- Growth at key customers, including a near 20% sequential increase at Lam Research, signals strong end-market demand and positions Ultra Clean Holdings for continued expansion.
- Raised price targets reflect analysts’ conviction in management's ability to capitalize on sector growth and drive margin improvement.
- Some analysts remain cautious about the timing and pace of a potential industry upcycle. They note that demand visibility beyond the immediate term could be limited.
- The company’s reliance on a small number of major customers, such as Lam Research, could lead to revenue concentration risks if end-market conditions shift.
- While inventories have normalized, any delay in broader sector recovery or macroeconomic headwinds may weigh on near-term growth and valuation upside.
- Continued execution is necessary to sustain improved margins. Any operational missteps could put recent gains at risk.
What's in the News
- Ultra Clean Holdings announced a share repurchase program and plans to buy back up to $150 million of its common shares over the next three years (Key Developments).
- The Board of Directors authorized a new buyback plan on October 23, 2025 (Key Developments).
- The company provided earnings guidance for Q4 2025, expecting revenue between $480 million and $530 million and GAAP diluted net income (loss) per share between $(0.11) and $0.09 (Key Developments).
Valuation Changes
- Fair Value: The consensus analyst fair value remains unchanged at $35 per share.
- Discount Rate: The discount rate has risen slightly from 12.32% to 12.5%, reflecting a modest increase in the risk premium applied to future cash flows.
- Revenue Growth: Projected revenue growth is effectively stable at approximately 10.0% year over year.
- Net Profit Margin: The company’s expected net profit margin is largely unchanged at 2.86%.
- Future P/E: The forward price-to-earnings ratio has increased marginally from 28.37x to 28.50x.
Disclaimer
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