Onto Innovation (ONTO): Evaluating Fair Value After Strong Guidance and Analyst Optimism on Memory Market Tailwinds

Onto Innovation, Inc. just released its third quarter results, showing a dip in earnings compared to last year. Despite this, management is signaling confidence by providing improved revenue and earnings guidance for the next quarter.

See our latest analysis for Onto Innovation.

Although Onto Innovation’s share price is down 23% year-to-date and its 1-year total shareholder return stands at -25%, momentum has started building again thanks to a 28% jump over the last 90 days. Recent technical signals, improved guidance, and sector tailwinds have shifted sentiment. This rebound is worth watching both in the short and long term.

If Onto’s recent turnaround has you rethinking what’s possible, it might be the perfect moment to broaden your perspective and discover fast growing stocks with high insider ownership

With analysts raising price targets and management pointing to a stronger next quarter, the question now is whether Onto Innovation shares are trading below their true value or if the recent optimism is already reflected in the price.

Most Popular Narrative: 11.8% Undervalued

Onto Innovation’s last close of $131.75 sits well below the most widely followed narrative’s fair value of $149.38. The gap has investors paying attention to the projections and underlying catalysts driving this estimate.

The accelerating adoption of AI packaging and advanced 2.5D/3D logic architectures is driving a major step up in demand for Onto Innovation's next-generation Dragonfly systems, with strong customer pull and new applications expanding both revenue and potential gross margin through higher ASPs and increased market share within leading-edge chip production.

Read the complete narrative.

Want to know the financial formula behind this ambitious target? Analysts forecast fast-paced revenue growth and boosted profit margins, all resting on bold market moves. Curious how these assumptions build up to that price? Find out which key numbers put this valuation ahead of the current stock price.

Result: Fair Value of $149.38 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, several factors such as delayed customer demand rebounds or unresolved geopolitical and supply risks could challenge the current growth narrative for Onto Innovation.

Find out about the key risks to this Onto Innovation narrative.

Build Your Own Onto Innovation Narrative

If you’re not convinced by the latest consensus or simply want to chart your own path, you can dive into the numbers and shape a personal narrative in under three minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Onto Innovation.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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