Nova (NVMI) AI Stock Analysis

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Nova

(NASDAQ:NVMI)

80Outperform

Nova's overall stock score reflects strong financial performance and positive earnings outlook, bolstered by robust growth in advanced packaging and strategic acquisitions. While the technical indicators are mixed, the company's solid financial health and optimistic guidance support a favorable view. However, the high valuation and potential risks related to China revenue exposure and rising expenses warrant caution.

Positive Factors

Acquisition Impact

The recent acquisition of Sentronics expands Nova’s offerings in dimensional metrology and broadens its offerings beyond 300 mm wafers, adding $100 M to $200 M to Nova’s TAM.

Earnings Performance

Nova reported another record quarter and guided to record results for the March quarter.

Market Position

Nova is the leader in integrated metrology and second in Optical CD, with sales from AI/HBM customers projected to grow to 20% of total by 2027.

Negative Factors

Geopolitical Concerns

Management sounded visibly more cautious on the China outlook and second half of 2025 visibility.

Market Dependency

NVMI, being one of the very few semicap companies not seeing the China weakness, continues to raise concerns.

Nova (NVMI) vs. S&P 500 (SPY)

Market Cap

$5.92B

Dividend YieldN/A

Average Volume (3M)251.25K

Price to Earnings (P/E)35.4

Beta (1Y)1.87

Revenue Growth29.83%

EPS Growth33.42%

CountryUS

Employees1,177

SectorTechnology

Sector Strength66

IndustrySemiconductors

Share Statistics

EPS (TTM)1.94

Shares Outstanding29,278,400

10 Day Avg. Volume168,306

30 Day Avg. Volume251,253

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.01

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit15.41

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$288.83

Price Target Upside42.86% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering7

Nova Business Overview & Revenue Model

Company DescriptionNova Ltd. (NVMI) is a leading provider of metrology solutions for the semiconductor manufacturing industry. The company develops, manufactures, and markets advanced process control systems used in the fabrication of integrated circuits. Nova's innovative technologies enable semiconductor manufacturers to improve their production yields, reduce costs, and enhance the performance of their products.

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 has shown robust financial performance with a revenue growth of 29.8% and strong profit margins. The balance sheet reflects a conservative financial strategy with low debt and high equity. Excellent cash flow management further enhances its financial strength.

Income Statement

Very Positive

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.

Balance Sheet

Very Positive

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.

Cash Flow

Very Positive

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
672.40M	517.92M	570.73M	416.11M	269.40M
	Gross Profit
387.09M	293.18M	322.40M	237.36M	152.92M
	EBIT
187.54M	132.26M	149.93M	112.39M	55.57M
	EBITDA
233.67M	172.41M	164.59M	121.32M	63.95M
	Net Income Common Stockholders
183.76M	136.31M	140.21M	93.10M	47.91M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
586.57M	443.68M	373.50M	410.16M	423.87M
	Total Assets
1.39B	1.13B	984.11M	805.15M	655.79M
	Total Debt
236.10M	244.14M	246.06M	220.94M	214.42M
	Net Debt
78.32M	136.57M	134.94M	94.24M	-17.89M
	Total Liabilities
462.63M	383.06M	397.14M	331.40M	284.25M
	Stockholders Equity
927.79M	750.75M	586.96M	473.75M	371.54M
Cash Flow		Free Cash Flow
218.05M	106.34M	98.22M	127.45M	53.81M
	Operating Cash Flow
235.27M	123.53M	119.54M	132.26M	60.25M
	Investing Cash Flow
-136.40M	-125.33M	-100.26M	-238.50M	-42.46M
	Financing Cash Flow
-48.35M	10.00K	-29.81M	11.00K	181.41M

Nova Technical Analysis

Technical Analysis Sentiment

Positive

Last Price202.18

Price Trends

50DMA

202.13

Positive

100DMA

214.08

Negative

200DMA

207.06

Negative

Market Momentum

MACD

0.05

Negative

RSI

57.39

Neutral

STOCH

87.90

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NVMI, the sentiment is Positive. The current price of 202.18 is above the 20-day moving average (MA) of 183.85, above the 50-day MA of 202.13, and below the 200-day MA of 207.06, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 57.39 is Neutral, neither overbought nor oversold. The STOCH value of 87.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
NVMI	80 Outperform	$5.92B	35.40	21.90%	―	29.83%	33.42%
ONTO	78 Outperform	$6.21B	31.30	11.01%	―	21.01%	65.27%
CAMT	78 Outperform	$3.13B	28.30	23.12%	1.94%	36.10%	48.15%
OLED	73 Outperform	$6.84B	30.98	14.58%	1.15%	6.13%	4.70%
AMKR	67 Neutral	$4.48B	14.22	7.76%	1.78%	-1.93%	-15.55%
Sector *	60 Neutral	$10.94B	10.48	-7.04%	2.99%	7.55%	-12.20%
ALGM	56 Neutral	$3.60B	―	-6.32%	―	-28.33%	-129.75%

* Technology Sector Average

Performance Comparison

NVMI

Nova

202.18

20.08

11.03%

AMKR

Amkor

18.14

-13.36

-42.41%

CAMT

Camtek

68.57

-15.90

-18.82%

ONTO

Onto Innovation

127.10

-81.55

-39.08%

OLED

Universal Display

144.02

-30.62

-17.53%

ALGM

Allegro MicroSystems

19.55

-10.54

-35.03%

Nova Earnings Call Summary

Earnings Call Date:Feb 13, 2025

(Q4-2024)

% Change Since: -17.62%|

Next Earnings Date:May 08, 2025

Earnings Call Sentiment Positive

Nova experienced a strong fiscal year with record revenue and profitability, driven by significant growth in advanced packaging and a successful Sentronics acquisition. However, there are potential challenges related to high revenue exposure to China and increased operating expenses.

Q4-2024 Updates

Positive Updates

Record Revenue and Profitability

Nova reported record revenue of $672.4 million for fiscal year 2024, representing a 30% year-over-year growth. Non-GAAP net income grew by 38%.

Quarterly Performance

Fourth quarter revenue reached a record high of $194.8 million, a 9% increase quarter-over-quarter and 45% growth year-over-year.

Advanced Packaging Growth

Advanced packaging revenue more than doubled, reaching 15% of product revenue. Integrated metrology solutions were adopted by four of the top five advanced packaging manufacturers.

Strong Financial Metrics

Operating margin reached 28% on a GAAP basis and 33% on a non-GAAP basis. Earnings per share on a non-GAAP basis were $1.94, exceeding guidance.

Sentronics Acquisition

Completed the acquisition of Sentronics Metrology, expected to be accretive within 12 months. The acquisition aligns with strategic growth priorities.

Negative Updates

China Revenue Exposure

39% of Nova's revenue in 2024 came from China, which may decline as growth will come from advanced nodes outside China.

Operating Expenses Increase

Operating expenses increased to $54.5 million on a GAAP basis, attributed to expanding R&D efforts.

Company Guidance

In the recent earnings call, Nova Limited provided an optimistic outlook for 2025, following a record-breaking fiscal year 2024. The company reported a 30% year-over-year revenue growth, reaching $672.4 million, and a 38% increase in non-GAAP net income. In the fourth quarter alone, Nova achieved $194.8 million in revenue, marking a 45% year-over-year increase, with gross margins of 56% (GAAP) and 58% (non-GAAP). The company's advanced packaging revenue more than doubled, contributing 15% to product revenue, and was bolstered by a significant market share gain in stand-alone OCD solutions. For Q1 2025, Nova expects revenue between $205 million and $215 million, with GAAP EPS ranging from $1.75 to $1.91. The company continues to focus on expanding its footprint in advanced logic and packaging markets, underscored by its recent acquisition of Sentronics, which is expected to be accretive on a non-GAAP basis within a year. Nova anticipates outperforming the mid-single-digit growth forecasted for the WFE market, driven by strategic market positioning and increased demand from AI-related applications.

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.