Photronics: DRAM Shortage And CapEx Surge Support Long-Term Margin Expansion And Rerating
Summarize this article with:
Ahmed Abdelazim2.82K FollowersFollow5ShareSavePlay(20min)CommentsSummaryPhotronics’ Q4 earnings and Q1 outlook confirm my initial thesis of a return to YoY growth in FY 2026.The ongoing DRAM shortage is driving captives to outsource more high-end photomask production to merchants positions Photronics for a multi-year cycle of revenue growth and EBIT margin expansion.Photronics’ ongoing expansions in Korea and the US position it to capitalize on Micron’s and Samsung’s DRAM capacity expansion projects, expected to come online in 2027 and 2028, respectively.I’m forecasting Photronics’ revenues to grow at an 8% CAGR through FY 2028 and reach a 30% EBIT margin in FY 2028.I’m reiterating my buy rating for Photronics and raising my price target to $65, implying 80% upside from its current valuation. Anatoly Morozov/iStock via Getty Images Since my initial coverage last September, Photronics, Inc. (PLAB) is up almost 50% on the back of strong Q4 earnings and a bullish FY 2026 outlook. The company’s Q4 earnings showed solid growth in its high-end IC segment, which posted recordThis article was written byAhmed Abdelazim2.82K FollowersFollowAs a former managing editor at a financial media publication focused on mid and small caps, I am using my experience to present investment opportunities in undervalued companies. My experience, combined with my academic background in financial markets and institutions, allows me to bring thorough research and analysis of financial statements, market trends, as well as upcoming events that may impact specific companies or industries.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.