Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 7 Jul, 25 | COHU | Buy | USD 19.95 | USD 20.95 | USD 22.14 | 28 days | Closed |
8.02%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Cohu, Inc., through its subsidiaries, provides semiconductor test equipment and services in the United States, China, Malaysia, the Philippines, Singapore, and internationally. It supplies test and inspection metrology automation systems, micro-electromechanical system test modules, test contactors, thermal subsystems, and data analytics software for semiconductor manufacturers and test subcontractors. The company also provides semiconductor automated test equipment for wafer level and device package testing; various test handlers, including pick-and-place, turret, gravity, strip, film frame, laser marker, and thermal sub-systems; interface products comprising test contactors, and probe heads and pins; spares and kits; various parts and labor warranties on test and handling systems, and instruments; and training on the maintenance and operation of its systems, as well as application, data management software, and consulting services on its products. In addition, it offers data analytics product that includes DI-Core, a software suite used to optimize Cohu equipment performance, which provides real-time online performance monitoring and process control. Further, the company provides artificial intelligence process control and analytics-based monitoring software. It markets its products through direct sales force and independent sales representatives. The company was formerly known as Cohu Electronics, Inc. and changed its name to Cohu, Inc. in 1972. Cohu, Inc. was incorporated in 1947 and is headquartered in Poway, California.
Gross Margin Expansion: Non-GAAP gross margin has increased by 10 percentage points from FY15 to FY24, reaching 45%
Recurring Revenue Strength: 65% of FY24 revenue (~USD261 million) came from recurring sources, including services and consumables
Low Adjusted EBITDA Margin: Adjusted EBITDA for FY24 is just 2%, significantly below the company’s mid-term target of 18–26%
Decline in Revenue: FY24 revenue declined to USD402 million from USD636 million in FY23, a drop of over 36.8%
Cohu’s high dependence on a limited number of customers and its significant exposure to geopolitical and regulatory risks in key international markets pose material threats to revenue stability and growth continuity
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 19.95 | 18.35 | 20.95 | 22.14 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Company Overview and Strategic Focus
Cohu, Inc. is a leading provider of semiconductor test and inspection solutions, offering a robust portfolio of equipment and services aimed at enhancing manufacturing yield and productivity. As of FY24, the company generated USD402 million in revenue, supported by approximately 24,800 installed systems and a recurring revenue base constituting around 65% of total sales. With a strong focus on customer value creation, Cohu has strategically positioned itself in high-growth segments such as AI data centers, automotive electronics, and industrial automation.
Technology Leadership and Product Innovation
Cohu maintains its competitive edge through advanced technologies in thermal control, AI-driven vision inspection, and test interface architectures. The company has launched several high-impact products targeting emerging applications including High Bandwidth Memory (HBM), Wide Bandgap devices, and mixed-signal semiconductors. Its Neon inspection platform and PAICe suite of AI process control tools exemplify its commitment to intelligent, high-yield manufacturing solutions.
Market Position and Addressable Opportunities
The company commands a ~20% share in a USD2 billion serviceable addressable market (SAM) and aims to expand this to USD3 billion through continued innovation and strategic acquisitions. By targeting markets such as xPU testing, HBM metrology, and backend process analytics, Cohu is aligning itself with industry growth drivers like edge AI computing and automotive ADAS. Its AI inspection solutions alone represent a ~USD100 million opportunity in the HBM segment, while its WBG device test solutions target a USD50 million niche with significant yield improvement potential.
Financial Performance and Profitability
Cohu’s profitability has steadily improved, with non-GAAP gross margins increasing from 34% in FY15 to 45% in FY24. The company has achieved a 10 percentage-point gross margin expansion over the past decade through recurring revenues, supply chain optimization, and the development of differentiated products. Mid-term projections anticipate revenue between USD600 million and USD800 million, with gross margins ranging from 48% to 50% and adjusted EBITDA margins between 18% and 26%.
Resilient Recurring Revenue Model
Cohu’s business model is underpinned by a resilient and diversified recurring revenue stream, comprising consumables, services, and data analytics. As of FY24, recurring revenues totaled USD253 million, driven by a 93% annual renewal rate on service contracts and a network of 450+ field engineers supporting over 280 high-volume manufacturing facilities across 31 countries. The model provides stable, long-term cash flows, reducing reliance on cyclical system sales.
Capital Allocation and Financial Health
With a strong balance sheet featuring USD201 million in cash and investments and minimal debt (USD18 million), Cohu has flexibility to invest in organic growth and strategic M&A. The company has repurchased approximately 4 million shares for USD117 million and continues to prioritize R&D investment, with USD637 million allocated from FY16 to FY24. Its capital-light structure supports efficient scaling and enhances shareholder returns.
Outlook and Strategic Vision
Cohu’s mid-term outlook is rooted in sustainable growth through innovation, market expansion, and operational efficiency. Its focus on high-value recurring business, entry into new growth verticals like HBM and AI-driven process control, and disciplined capital allocation are expected to drive revenue CAGR of ~14% over the next 3–5 years. The company's mission remains to enable a smarter, safer, and more connected future through leading-edge semiconductor solutions.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Cohu, Inc. (NASDAQ: COHU) at the closing market price of USD 19.95, as on July 7, 2025 at 09:30 AM PDT.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Semiconductor Equipment & Materials
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| COHU Cohu Inc |
-0.36 1.55% | 22.87 | - | 32.05 | 2.11 | 1.00 | 1.67 | 31.07 |
| ASML ASML Holding NV ADR |
-57.955 5.39% | 1018.10 | 49.01 | 44.05 | 13.98 | 26.27 | 13.85 | 38.25 |
| ASMLF ASML Holding NV |
-48.79 4.56% | 1020.37 | 35.84 | 34.36 | 10.90 | 22.09 | 10.98 | 30.93 |
| AMAT Applied Materials Inc |
-10.99 4.25% | 247.85 | 22.32 | 20.00 | 5.84 | 8.22 | 5.64 | 17.45 |
| KLAC KLA-Tencor Corporation |
-50.24 4.11% | 1173.13 | 40.82 | 25.71 | 9.52 | 30.25 | 9.80 | 24.77 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is July 07,2025. The reference data in this report has been partly sourced from REFINITIV
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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