SkyWater Technology price target raised to $16 from $12 at Craig-Hallum

Craig-Hallum raised the firm’s price target on SkyWater Technology to $16 from $12 and keeps a Buy rating on the shares. The firm notes SkyWater had another strong quarter, with upside on sales/EPS, and is guiding to strong ATS sales growth in 2024, which is their biggest value driver long term. While some investors may be concerned about lower Wafer Services sales and the gross margin impact from higher tool sales in 2024, Craig-Hallum is not. The WS sales that are declining are old products from IFX and the higher tool sales represent customer investments not only in capex that offset SkyWater’s needs, but represent a partnership and sole source arrangement that could drive strong potential future revenue growth, the firm adds.