Onto Innovation has joined a host of other semiconductor equipment vendors offering a lower outlook for the current March quarter. Onto stock fell on Friday.
The Wilmington, Mass.-based company late Thursday beat estimates for the fourth quarter but its projections for the current period fell below Wall Street's targets.
Onto earned an adjusted $1.57 a share on sales of $253.3 million in the December quarter. Analysts were predicting earnings of $1.32 a share on sales of $250.8 million. On a year-over-year basis, Onto earnings rose 28% while sales climbed 12%.
For the current quarter, however, Onto forecast adjusted earnings of 88 cents a share on sales of $200 million. That's based on the midpoint of its outlook. Analysts expected earnings of $1 a share on sales of $210 million in the first quarter, according to FactSet.
Onto Stock Falls After Report
On the stock market today, Onto stock sank 2.2% to close at 80.90.
Like other chip gear suppliers, Onto has been impacted by semiconductor manufacturers cutting their capital equipment expenditures amid a market downturn.
"We expect a slow start to 2023," Chief Executive Michael Plisinski said on a conference call with analysts. "For the first quarter, we see specialty and advanced packaging declining by mid- to upper teens, impacted by both the broader market slowdowns and the effects of seasonality. We expect advanced nodes revenue to decline by an estimated 30%, primarily due to sharp reductions in memory spending and restrictions in China."
Wafer fab equipment spending is seen declining 20% in 2023, he said.
"Looking beyond the quarter, we see customers reducing wafer starts or delaying expansion plans in response to the current oversupply of chip inventories," Plisinski said.
Onto Stock Gets Price-Target Hikes
Needham analyst Quinn Bolton reiterated his buy rating on Onto stock and raised his price target to 92 from 75.
Onto is cutting costs and streamlining operations to preserve its earnings targets for 2023, he said.
D.A. Davidson analyst Hans Chung kept his buy rating on Onto stock and upped his price target to 95 from 90.
"Despite the near-term downturn, Onto continues to penetrate into new segments and secure new customer wins, which should drive sizable growth in the next spending cycle," Chung said in a note to clients.
Semiconductor Equipment Stocks A Mixed Bag
In addition to Onto, other semiconductor equipment stocks guiding lower for the current period have included Advanced Energy Industries, KLA and Lam Research.
Outliers in the industry that delivered beat-and-raise reports included ASML, Axcelis Technologies and FormFactor.
Onto stock is one of 10 semiconductor equipment stocks on the IBD Tech Leaders list. It has an IBD Composite Rating of 96 out of 99. The Composite Rating scores a stock's key growth metrics against all other stocks, regardless of industry group.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.