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UPDATE: Rosenblatt Starts Cohu (COHU) at Buy, $65 PT

June 29, 2021

Rosenblatt analyst Scott Graham initiates coverage on Cohu (NASDAQ: COHU) with a Buy rating and a price target of $65.00.

The analyst commented, "We are initiating coverage of COHU with a Buy rating and a $65 price target. Rosenblatt Securities believes we're in a "Mother of All Cycles" period in Semiconductor, driven by continuing penetration of AI in major Semi sub-sectors. We believe COHU, with the Auto and Industrial markets having turned up, is now on this train. We expect COHU's sales to continue to benefit from this backdrop and its targeted strategies which seek to tap faster-growth niches and seculars in its markets. Additionally, productivity strategies are in place to drive margins. COHU's new operating model's target margins are significantly higher than the current margin. We expect mix to hurt gross margin near-term but still estimate healthy non-GAAP operating margin expansion in our forecast periods."

"The recent secondary and concerns over mix have restrained the stock and reduced its valuation relative to peers. But we expect this will be displaced by outperformance over the next year from high quality earnings growth and a building cash balance / acquisition opportunity. Our estimates are above the Street."

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