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Nova (NVMI)
NASDAQ:NVMI
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Nova
(NASDAQ:NVMI)
82Outperform
Positive Factors
Market Demand
Nova sees robust demand in Gate-All-Around and advanced packaging, targeting an accumulative $500M revenue with year-over-year growth each year until CY2026.
Product Innovation
Nova is well positioned to outperform in the WFE market with strong momentum across all segments, driven by new products like Elipson, Metrion, and Sentronics.
Revenue Growth
Record service sales of $39.4 million were reported, showing a year-over-year increase of 30.4%.
Negative Factors
China Market
China sales, comprising 39% of total sales, are facing demand weakness due to leading-edge restrictions and are expected to be flat to slightly down in the future.
Earnings Outlook
Somewhat lower earnings are expected in the June quarter due to flattish sales.
Market Reaction
The stock did not react well to a smaller earnings beat, as investors may believe this performance is 'as good as it gets' for this cycle.
Nova (NVMI) vs. S&P 500 (SPY)
Market Cap
$5.62B
Dividend YieldN/A
Average Volume (3M)276.06K
Price to Earnings (P/E)33.6
Beta (1Y)1.83
Revenue Growth29.83%
EPS Growth33.42%
CountryUS
Employees1,177
SectorTechnology
Sector Strength76
IndustrySemiconductors
Share Statistics
EPS (TTM)2.18
Shares Outstanding29,300,232
10 Day Avg. Volume335,987
30 Day Avg. Volume276,063
Financial Highlights & Ratios
PEG Ratio1.76
Price to Book (P/B)5.71
Price to Sales (P/S)0.00
P/FCF Ratio25.52
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue2.21
Enterprise Value/Gross Profit13.41
Enterprise Value/Ebitda7.26
Forecast
1Y Price Target
$272.50Price Target Upside42.10% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Nova Business Overview & Revenue Model
Company DescriptionNova Ltd. designs, develops, produces, and sells process control systems used in the manufacture of semiconductors in Israel, Taiwan, the United States, China, Korea, and internationally. Its product portfolio includes a set of metrology platforms for dimensional, films, and materials and chemical metrology measurements for process control for various semiconductor manufacturing process steps, including lithography, etch, chemical mechanical planarization, deposition, electrochemical plating, and advanced packaging. The company serves various sectors of the integrated circuit manufacturing industry, including logic, foundries, and memory manufacturers, as well as process equipment manufacturers. Nova Ltd. was formerly known as Nova Measuring Instruments Ltd. and changed its name to Nova Ltd. in July 2021. The company was incorporated in 1993 and is headquartered in Rehovot, Israel.
How the Company Makes MoneyNova Ltd. generates revenue primarily through the sale of its metrology systems and related software products to semiconductor manufacturers. Key revenue streams include the direct sale of hardware and software, as well as service contracts for ongoing maintenance and support. The company's earnings are significantly influenced by the cyclicality of the semiconductor industry, technological advancements, and capital expenditure trends of its clients. Nova collaborates with leading semiconductor companies and foundries, which helps in optimizing its product offerings and expanding its market reach.
Nova Financial Statement Overview
Summary
Nova presents a compelling financial profile with strong growth, profitability, and cash flow metrics. The company benefits from excellent revenue growth, efficient operations, and prudent financial management. Its strong balance sheet and cash flow capabilities underscore its resilience in the semiconductors and equipment industry. While the company is well-positioned, continuous monitoring of market conditions and leverage will be crucial to maintaining this trajectory.Income Statement
Nova has demonstrated impressive revenue growth, with a 29.8% increase from 2023 to 2024. The gross profit margin of 57.6% and net profit margin of 27.3% reflect strong profitability. Consistent EBIT and EBITDA margins of 27.9% and 34.7% respectively indicate operational efficiency. These metrics highlight Nova's robust growth and profitability in the highly competitive semiconductor industry.92
Very Positive
Balance Sheet
The company maintains a solid balance sheet with a debt-to-equity ratio of 0.25, showcasing a conservative approach to leveraging. A return on equity of 19.8% indicates effective use of equity capital to generate profits. The equity ratio of 66.7% suggests substantial financial stability. Overall, Nova's balance sheet reflects strong financial health with low debt and high shareholder equity.85
Very Positive
Cash Flow
Nova's free cash flow grew by 105.1% in 2024, evidencing strong cash generation capabilities. The operating cash flow to net income ratio of 1.28 demonstrates effective cash conversion from earnings. Furthermore, the free cash flow to net income ratio of 1.19 indicates robust free cash flow relative to profits, which supports reinvestment and shareholder returns. These metrics show Nova's strong cash flow management.89
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 743.95M | 672.40M | 517.92M | 570.73M | 416.11M | 269.40M | Gross Profit |
| 426.13M | 387.09M | 293.18M | 322.40M | 237.36M | 152.92M | EBIT |
| 213.55M | 187.54M | 132.26M | 149.93M | 112.39M | 55.57M | EBITDA |
| 231.46M | 235.28M | 172.41M | 164.59M | 121.32M | 63.95M | Net Income Common Stockholders |
| 211.72M | 183.76M | 136.31M | 140.21M | 93.10M | 47.91M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 541.85M | 586.57M | 443.68M | 373.50M | 410.16M | 423.87M | Total Assets |
| 1.46B | 1.39B | 1.13B | 984.11M | 805.15M | 655.79M | Total Debt |
| 235.73M | 236.10M | 244.14M | 246.06M | 220.94M | 214.42M | Net Debt |
| 94.68M | 78.32M | 136.57M | 134.94M | 94.24M | -17.89M | Total Liabilities |
| 481.66M | 462.63M | 383.06M | 397.14M | 331.40M | 284.25M | Stockholders Equity |
| 982.12M | 927.79M | 750.75M | 586.96M | 473.75M | 371.54M |
| Cash Flow | Free Cash Flow | ||||
| 220.13M | 218.05M | 106.34M | 98.22M | 127.45M | 53.81M | Operating Cash Flow |
| 243.40M | 235.27M | 123.53M | 119.54M | 132.26M | 60.25M | Investing Cash Flow |
| -153.51M | -136.40M | -125.33M | -100.26M | -238.50M | -42.46M | Financing Cash Flow |
| -68.35M | -48.35M | 10.00K | -29.81M | 11.00K | 181.41M |
Nova Technical Analysis
Negative
191.77
Price Trends
192.95
Negative
214.19
Negative
206.52
Negative
Market Momentum
0.90
Negative
48.94
Neutral
68.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NVMI, the sentiment is Negative. The current price of 191.77 is below the 20-day moving average (MA) of 192.61, below the 50-day MA of 192.95, and below the 200-day MA of 206.52, indicating a bearish trend. The MACD of 0.90 indicates Negative momentum. The RSI at 48.94 is Neutral, neither overbought nor oversold. The STOCH value of 68.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NVMI.
Nova Risk Analysis
Nova disclosed 51 risk factors in its most recent earnings report. Nova reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Nova Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $5.62B | 33.58 | 21.90% | ― | 29.83% | 33.42% | |
79 Outperform | $3.01B | 24.95 | 24.82% | 2.02% | 32.63% | 46.16% | |
74 Outperform | $4.86B | 22.52 | 11.83% | ― | 21.23% | 56.90% | |
73 Outperform | $7.39B | 32.33 | 14.58% | 1.06% | 6.13% | 4.70% | |
72 Outperform | $4.87B | 15.46 | 7.76% | 1.64% | -1.93% | -15.55% | |
60 Neutral | $11.59B | 10.39 | -7.23% | 2.94% | 7.46% | -10.76% | |
56 Neutral | $5.07B | ― | -7.09% | ― | -28.33% | -129.75% |
* Technology Sector Average
Performance Comparison
NVMI
Nova
191.77
-11.64
-5.72%
AMKR
Amkor
19.73
-12.51
-38.80%
CAMT
Camtek
65.94
-33.91
-33.96%
ONTO
Onto Innovation
99.40
-128.30
-56.35%
OLED
Universal Display
155.51
-18.47
-10.62%
ALGM
Allegro MicroSystems
27.51
-2.54
-8.45%
Nova Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -4.46%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
Nova Limited reported a robust quarter with record revenue growth and strong market positioning. There were notable advancements in gate-all-around and advanced packaging solutions, and the company successfully expanded its facilities and completed an acquisition. However, macroeconomic uncertainties and tariff impacts pose potential challenges, particularly affecting gross margins and the China market outlook.Q1-2025 Updates
Positive Updates
Record Revenue and Profitability
Nova achieved record results with a 50% year-over-year revenue growth and a 56% increase in non-GAAP EPS. The total revenues reached $213 million, marking the fourth consecutive quarter of all-time high revenues.
Strong Market Position
Nova's market share increased significantly in the thin-film and OCD metrology segment, becoming the second-largest vendor. This was validated by the Annual Gartner market share report.
Expansion in Gate-All-Around and Advanced Packaging
Significant revenue increase from gate-all-around and advanced packaging processes, with record sales in standalone solutions like the PRISM platform.
Record Software and Services Growth
The software business achieved record performance, with services revenues growing more than 30% year over year.
Successful Acquisition and Facility Expansion
Completion of the Sentronics acquisition and the opening of a new facility in Germany, doubling the capacity of Nova’s chemical metrology division.
Negative Updates
Macroeconomic Uncertainty
Global macroeconomic uncertainty and potential indirect implications of the current international trade climate could impact various sectors.
Tariff Impact on Margins
New tariffs could reduce gross margins by approximately 30 to 50 basis points, although the company is working on mitigation strategies.
Flat or Slight Decline in China Revenue
Despite a good backlog, nominal value from China business is expected to stay flat or slightly decline, with a lower share of revenue as advanced nodes become more prominent.
Company Guidance
During the Nova Limited First Quarter 2025 results conference call, the company reported record performance with revenues reaching $213 million, reflecting a 10% quarter-over-quarter and 50% year-over-year growth. Non-GAAP earnings per share (EPS) increased by 56% year-over-year. The gross margins were reported at 57% on a GAAP basis and 59.6% on a non-GAAP basis, surpassing the target model range of 57% to 60%. Operating expenses were $59 million on a GAAP basis and $53.5 million on a non-GAAP basis. The effective tax rate stood at approximately 15%. The company provided guidance for the second quarter with expected revenues between $210 million and $220 million, and non-GAAP EPS ranging from $1.96 to $2.14. The anticipated gross margins for the second quarter are approximately 56% on a GAAP basis and 58% on a non-GAAP basis. The company also highlighted its strategic positioning in advanced packaging and gate-all-around processes, projecting continued robust demand and market share growth despite macroeconomic uncertainties.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.