In a report released today, Krish Sankar from TD Cowen maintained a Buy rating on Ultra Clean Holdings (UCTT – Research Report), with a price target of $32.00.
Krish Sankar has given his Buy rating due to a combination of factors that highlight both challenges and opportunities for Ultra Clean Holdings. Despite a recent miss in the March quarter and a cautious outlook for the year, the company has demonstrated resilience through effective cost management and operational flexibility. Sankar acknowledges the impact of delayed orders from a domestic China manufacturer and a European customer, which contributed to a revenue shortfall. However, these delays are expected to be resolved in the upcoming quarters, providing a potential rebound in sales.
Additionally, Ultra Clean Holdings has strategically positioned itself in the Chinese market by sourcing locally, which mitigates some risks associated with export controls. Although the looming threat of restrictions remains a concern, the company’s ability to adapt to supply chain changes is seen as a positive. Furthermore, the integration of previous acquisitions and expansion into new product areas are expected to support long-term growth. These factors collectively justify the Buy rating, as the company is poised to navigate near-term challenges while capitalizing on future opportunities.