A Wall Street brokerage on Friday initiated coverage of three stocks that play in two of the fastest-growing areas of the semiconductor equipment market. Onto Innovation, Nova and Camtek all received buy ratings from Jefferies.
Jefferies analyst Vedvati Shrotre sees bright prospects for the trio, citing strong demand for their equipment amid rising chip complexity.
The three companies play in the fast-growing segments of wafer-level packaging inspection and optical metrology, Shrotre said in a note to clients. Metrology is the scientific study of measurement.
Camtek and Onto Innovation are exposed to wafer-level packaging inspection, where growth is driven by increasing semiconductor package complexity. Meanwhile, Nova and Onto Innovation play in optical metrology, where growth is driven by the transition to 3D transistor and chip architectures.
Onto Innovation, Peers Rise After Report
The three stocks have potential upside of 20% to 40% based on her price targets. So Shrotre set a price target of 35 on Camtek, 115 on Nova and 100 on Onto Innovation.
On the stock market today, Camtek stock rose 1.8% to close at 26.01 as Nova stock advanced 0.8% to 93.37. Also, Onto Innovation stock increased 1.3% to 82.71.
Wafer-level packaging of chips has become more complicated as chipmakers use techniques like chiplets and stacking to keep the industry on pace with Moore's Law. That is benefiting Camtek and Onto Innovation, Shrotre said.
A Trio Of Tech Leaders
Meanwhile, semiconductors have grown more complex as chip structures grow vertically. That trend applies to 3D Nand and 3D DRAM memory chips and other architectures like gate-all-around transistors.
"As the complexity of devices increases, the number of etch and deposition steps increases, driving a need for additional metrology steps," Shrotre said.
Further, chipmakers are using more types of materials in transistors, increasing the need for metrology gear, she said.
The metrology trends are catalysts for Nova and Onto Innovation, Shrotre said. Also, Camtek, Nova and Onto Innovation all are on the IBD Tech Leaders list.
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