Photronics (PLAB) Stock Trades Up, Here Is Why

Anthony Lee /
2023/12/13 10:01 am EST

What Happened:

Shares of semiconductor photomask manufacturer Photronics (NASDAQ:PLAB) jumped 5.9% in the pre-market session after the company reported fourth-quarter results, with revenue and EPS beating Wall Street's expectations. Inventory levels also improved. The company reported growth in both integrated circuits (IC) and flat panel displays (FPD) segments despite the "prolonged industry downturn." Looking ahead, guidance was fine, with fiscal Q1 revenue and EPS guidance roughly in line with expectations. Zooming out, this was a solid quarter that should have shareholders feeling comfortable with the trajectory of the company's performance.

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What is the market telling us:

Photronics's shares are very volatile and over the last year have had 10 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 7 months ago, when the stock gained 11.2% on the news that the company reported impressive second quarter results that beat analysts' expectations for revenue. Management highlighted the record revenue achieved in the quarter, which was driven by robust demand for integrated circuits and flat panel displays despite mixed demand and macro backdrops for other semiconductor peers. Profitability also improved, with gross margin and operating margin both exceeding expectations. These were driven by positive volume leverage, pricing, favorable mix, and tight control of cost. Lastly, revenue and EPS guidance for the next quarter were ahead of Consensus, making for a solid quarter with many reasons for investor positivity.

Photronics is up 55.9% since the beginning of the year, and at $25.94 per share it is trading close to its 52-week high of $26.95 from July 2023. Investors who bought $1,000 worth of Photronics's shares 5 years ago would now be looking at an investment worth $2,607.

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