Last Update 09 Dec 25
ENTG: AI Materials Demand And New U.S. Facility Will Drive Upside
Analysts have modestly trimmed their price target on Entegris by about $1 to roughly $100 per share, citing slightly lower assumed discount rates and a marginally less demanding future P E multiple, while leaving long term growth and margin expectations intact.
Analyst Commentary
Recent commentary on the sector highlights Entegris as one of only a few pure play electronic chemicals and materials providers, a positioning that investors increasingly view as strategically valuable as semiconductor capital spending and AI related demand scale up.
Bullish analysts point out that peer comparisons within this narrow group suggest room for multiple expansion if Entegris can sustain above market organic revenue growth and demonstrate leverage from its existing manufacturing footprint.
At the same time, some investors remain focused on the near term risk that sector rotation, especially from traditional chemical investors, could introduce volatility in valuation multiples as ownership of specialty materials names continues to shift toward semiconductor focused portfolios.
Bullish Takeaways
- Recognition of Entegris as a pure play electronic materials supplier supports the case for a premium valuation multiple versus diversified chemical peers, particularly if semiconductor demand remains resilient.
- Sector commentary pointing to strong organic growth prospects for comparable materials companies reinforces confidence that Entegris can achieve its targeted revenue trajectory and justify long term growth assumptions in current models.
- Growing AI infrastructure investment, which relies heavily on advanced semiconductor processes, is viewed as an incremental tailwind for Entegris consumables, underpinning visibility into mid cycle earnings power.
- As more semiconductor focused investors add exposure to specialty materials, bullish analysts see potential for improved liquidity and a broader shareholder base, supporting share price stability over time.
Bearish Takeaways
- Bearish analysts caution that increased attention on the small group of pure play electronic materials names could lead to crowded positioning and higher sensitivity to any execution missteps at Entegris.
- There is concern that if semiconductor spending growth normalizes or AI related demand proves lumpier than expected, current growth expectations embedded in valuation may need to be revised lower.
- Rotation away from legacy chemical investors, without a fully mature semiconductor investor base stepping in, could create interim pressure on Entegris multiples even if fundamentals remain intact.
- Peer outperformance in revenue growth or margin expansion could lead investors to favor other names in the group, limiting relative upside for Entegris if it does not deliver on planned operational improvements.
What's in the News
- Mizuho highlighted Entegris as one of only two pure play electronic chemicals and materials companies alongside newly covered Qnity Electronics, noting the sector’s above average organic growth potential and AI driven demand. (Periodicals)
- Entegris opened its new 135,000 square foot Colorado Springs Manufacturing Center of Excellence, expanding advanced filtration, purification, and FOUP production capacity in the U.S. and strengthening its role in the domestic semiconductor supply chain. (Key Developments)
- The Colorado Springs facility marks the return of FOUP manufacturing to the U.S. after decades, supported by up to $100 million in government incentives and creating several hundred direct and indirect jobs in Colorado. (Key Developments)
- Entegris issued fourth quarter 2025 guidance, projecting sales of $790 million to $830 million and GAAP diluted EPS of $0.35 to $0.42, providing a reference point for its next phase of earnings. (Key Developments)
Valuation Changes
- Fair Value: Unchanged at approximately $100.50 per share, indicating no revision to the intrinsic value estimate.
- Discount Rate: Fallen slightly from about 12.04 percent to approximately 11.70 percent, modestly lowering the required return assumption.
- Revenue Growth: Effectively unchanged at around 6.15 percent, reflecting stable long term top line growth expectations.
- Net Profit Margin: Essentially flat at roughly 12.68 percent, signaling no material shift in long term profitability assumptions.
- Future P/E: Edged down slightly from about 44.25x to roughly 43.85x, implying a marginally less demanding valuation multiple on projected earnings.
Key Takeaways
- Localization of manufacturing and supply chains boosts resilience, reduces revenue volatility, and strengthens positioning in key Asian markets.
- Advanced materials leadership and operational efficiencies support margin expansion and capture opportunities from rising semiconductor complexity and long-term industry growth trends.
- Geopolitical trade risks, cyclical semiconductor demand, operational inefficiencies, high debt, and customer concentration threaten Entegris' revenue stability, profitability, and investment capacity.
Catalysts
About Entegris- Provides advanced materials and process solutions for the semiconductor and other high-technology industries in North America, Taiwan, South Korea, Japan, China, Europe, and Southeast Asia.
- Significant ramping of new manufacturing facilities in Taiwan and Colorado, as well as ongoing regionalization of supply chains, positions Entegris to better serve global customers and mitigate trade policy risks-this should shorten lead times, improve supply chain security, and drive future revenue growth as more production is localized.
- Investments and leadership in advanced materials for next-generation nodes, including CMP slurries, selective etch, and deposition materials, position Entegris to capitalize on upcoming node transitions (e.g., advanced logic, 3D NAND, HBM) and increasing semiconductor complexity, supporting higher ASPs and improved gross margins.
- Expansion and deepening of regional manufacturing clusters in Asia is enabling customer requalification and quick recovery from trade/tariff disruptions, especially in China, directly reducing volatility in revenues and helping restore growth in these fast-growing markets.
- Ongoing cost reduction initiatives and operational efficiencies, alongside higher expected facility utilization in the second half and beyond, are set to enhance free cash flow and expand margins once the current inventory and ramping inefficiencies abate.
- Entegris is set to benefit from the long-term acceleration in semiconductor demand driven by proliferating AI, high-performance computing, and increased digitalization and IoT adoption, underpinning robust multi-year revenue and earnings growth potential.
Entegris Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Entegris's revenue will grow by 6.4% annually over the next 3 years.
- Analysts assume that profit margins will increase from 9.2% today to 12.9% in 3 years time.
- Analysts expect earnings to reach $502.7 million (and earnings per share of $3.41) by about September 2028, up from $295.5 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 41.6x on those 2028 earnings, down from 41.7x today. This future PE is greater than the current PE for the US Semiconductor industry at 33.5x.
- Analysts expect the number of shares outstanding to grow by 0.4% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 11.35%, as per the Simply Wall St company report.
Entegris Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Persistent uncertainty and volatility around global trade policies-especially US-China tariffs-can disrupt Entegris' revenue streams and operational planning, introduce erratic customer buying patterns, and impair long-term sales visibility and growth, particularly as 70% of revenue is Asia-based and requalification of non-US production remains in transition.
- Ongoing industry softness in mainstream logic, DRAM, and NAND, with weak fab utilization (mid-80%) and projected only modestly up at best wafer starts, underscores the continued risk from the cyclical and inventory-driven nature of the semiconductor industry, potentially leading to muted revenue growth and ongoing sales volatility.
- Significant operational inefficiencies and margin pressures associated with the ramp and transition of new manufacturing facilities in Taiwan and Colorado, as well as localization efforts, are currently weighing on gross margins and could persist if volume recovery is slow or execution stumbles, directly impacting profitability.
- Elevated gross leverage (gross debt ~$4B, 4.3x leverage) inherited from acquisitions constrains financial flexibility and increases interest expenses (~$48M/quarter), risking net margin compression and limiting Entegris' ability to invest aggressively in R&D or weather prolonged downturns.
- Customer concentration and the need for ongoing product requalification-especially for strategic customers in China and Asia-create vulnerability to demand fluctuations and require continued heavy investment; any delays, technical failures, or strategic shifts among these large customers could materially impact top-line revenue and earnings stability.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $99.0 for Entegris based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $115.0, and the most bearish reporting a price target of just $85.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.9 billion, earnings will come to $502.7 million, and it would be trading on a PE ratio of 41.6x, assuming you use a discount rate of 11.4%.
- Given the current share price of $81.22, the analyst price target of $99.0 is 18.0% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
