Group 1 - Amkor Technology (AMKR) closed at $30.36, down 0.99% from the previous trading day, underperforming the S&P 500's gain of 0.13% [1] - The stock has decreased by 5.84% over the past month, while the Computer and Technology sector gained 1.56% and the S&P 500 increased by 3.67% [1] - The upcoming earnings report is expected to show an EPS of $0.50, a 7.41% decline year-over-year, with projected revenue of $1.84 billion, up 0.78% from the previous year [1] Group 2 - Full-year Zacks Consensus Estimates predict earnings of $1.54 per share and revenue of $6.51 billion, reflecting year-over-year increases of 5.48% and 0.15% respectively [2] - Recent changes in analyst estimates indicate a shifting business landscape, with upward revisions suggesting analysts' positive outlook on the company's operations [2] Group 3 - Amkor Technology currently holds a Zacks Rank of 5 (Strong Sell), with the Zacks Consensus EPS estimate remaining unchanged over the last 30 days [3] - The company is trading at a Forward P/E ratio of 19.97, which is lower than the industry's Forward P/E of 28.24, indicating a valuation discount [3] - The Electronics - Semiconductors industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 134, placing it in the bottom 48% of over 250 industries [3]

Core Viewpoint - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List, indicating a significant downward revision in earnings estimates for these companies [1] Company Summaries - **Carter Bankshares (CARE)**: A bank holding company offering various financial services. The Zacks Consensus Estimate for its current year earnings has been revised downward by 68.8% over the last 60 days [1] - **Amkor Technology (AMKR)**: The largest independent provider of semiconductor packaging and test services globally. The Zacks Consensus Estimate for its current year earnings has been revised downward by 12.5% over the last 60 days [1] - **Caleres (CAL)**: A footwear retailer and wholesaler. The Zacks Consensus Estimate for its current year earnings has been revised downward by almost 8.2% over the last 60 days [1]

Company Performance - Amkor Technology (AMKR) closed at $28.84, reflecting a +0.56% change from the previous day, outperforming the S&P 500's gain of 0.45% [1] - The stock has decreased by 8.78% over the past month, underperforming the Computer and Technology sector's loss of 0.98% and the S&P 500's gain of 2.54% [1] - The upcoming earnings report is expected to show an EPS of $0.50, a decline of 7.41% year-over-year, with revenue projected at $1.84 billion, an increase of 0.78% from the prior-year quarter [1] Annual Forecast - Zacks Consensus Estimates predict earnings of $1.54 per share and revenue of $6.51 billion for the year, representing changes of +5.48% and +0.15% respectively compared to the previous year [2] - Recent revisions to analyst forecasts for Amkor Technology are crucial as they reflect the changing nature of near-term business trends, with positive revisions indicating a favorable business outlook [2] Valuation and Ranking - Amkor Technology has a Zacks Rank of 4 (Sell), with the consensus EPS projection remaining unchanged over the past 30 days [3] - The company is currently trading at a Forward P/E ratio of 18.68, which is a discount compared to the industry average Forward P/E of 28.7 [3] - The Electronics - Semiconductors industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 96, placing it in the top 38% of over 250 industries [3]

Group 1 - Amkor Technology (AMKR) is the world's largest independent provider of semiconductor packaging and test services, with a current year earnings estimate revised 13.5% downward over the last 60 days [1] - BioTechne Corp (TECH) is a global life sciences company that develops, manufactures, and sells biotechnology products and clinical diagnostic controls, with a current year earnings estimate revised almost 9.7% downward over the last 60 days [1] - China Mengniu Dairy (CIADY) is a manufacturer and distributor of dairy products primarily in China, with a current year earnings estimate revised 9.4% downward over the last 60 days [1]

Core Viewpoint - The average brokerage recommendation (ABR) for Amkor Technology (AMKR) is 1.88, indicating a consensus leaning towards a "Buy" rating, but caution is advised as brokerage recommendations may not reliably predict stock price movements [1][2]. Brokerage Recommendation Trends - The ABR of 1.88 is derived from eight brokerage firms, with four "Strong Buy" and one "Buy" recommendations, accounting for 50% and 12.5% of total recommendations respectively [1]. - Studies indicate that brokerage recommendations often show limited success in guiding investors towards stocks with the highest price increase potential due to analysts' inherent biases [2][5]. Zacks Rank vs. ABR - The Zacks Rank, which is based on earnings estimate revisions, is a more reliable indicator of near-term stock price performance compared to the ABR, which is solely based on brokerage recommendations [3][4]. - The Zacks Rank is displayed in whole numbers (1 to 5) and reflects timely updates based on analysts' earnings estimates, unlike the ABR which may not be current [4][6]. Earnings Estimate Revisions - The Zacks Consensus Estimate for Amkor Technology has decreased by 12.9% over the past month to $1.54, indicating growing pessimism among analysts regarding the company's earnings prospects [7]. - This decline in earnings estimates has resulted in a Zacks Rank of 4 (Sell) for Amkor Technology, suggesting potential downward pressure on the stock [7].

Industry Overview - The tech sector has experienced significant growth over the past year, largely driven by advancements in artificial intelligence, which has positively impacted the overall market and potentially averted a recession [1] - There is a growing sentiment among investors to look beyond the dominant tech stocks, often referred to as the "magnificent seven," to discover lesser-known tech stocks that may offer substantial growth potential [1][2] Company Highlights - **Amkor Technology (AMKR)**: - A chip testing and packaging firm that has seen its stock price decline from $44 to $38 since mid-July, making it a potential buy [3] - Expected earnings of $1.82 in 2024 with a forward P/E ratio of 26.5 suggests a target price of $48 [3] - Anticipated earnings growth of approximately 30% annually through 2026, indicating strong future demand for its shares [3] - **Wolfspeed (WOLF)**: - Focuses on manufacturing wide-bandgap semiconductors using silicon carbide and gallium nitride, which outperform traditional materials [4][5] - Although currently unprofitable, the company is expected to experience significant growth in the coming years, with analysts projecting a higher target price than its current valuation [5] - **Impinj (PI)**: - A leader in the RFID space, providing real-time visibility for physical items, with strong recognition in retail and supply chain sectors [6] - Reported Q2 revenues of $102 million, exceeding guidance, and per share earnings of $1.44 for the first half of 2024 [6] - Entered net profitability this year, with expected earnings growth of 30-50% over the next several years, positioning the company for explosive growth [7]

Company Overview - Amkor Technology reported Q2'24 earnings on July 29, 2024, showing strong results but softer-than-expected guidance for Q3'24, with revenue expected at $1.835 billion, up 26% sequentially, driven by advanced packaging [1] - The Q3'24 revenue guidance falls at the low end of analysts' estimates, indicating flat expectations for the OSAT market compared to Q3'23 [1] - Following the earnings release, Amkor's stock experienced significant selling pressure, dropping 18% immediately and continuing to decline, resulting in a total drop of 24% [1] Market Position and Performance - Amkor is positioned in a challenging market, with management indicating a slower-than-expected recovery in the automotive segment, suggesting ongoing destocking phases [2] - The communications segment saw a 17% year-over-year growth in Q2'24, attributed to new chip ramp-ups for the next iPhone release [3] - Management anticipates modest growth in the last two quarters of FY24, with growth rates of 3% and 8% for Q3'24 and Q4'24, respectively [4] Future Outlook - Forecasts for FY25 indicate a potential 23% decline in revenue due to a softening consumer market, but this may be offset by strength in the automotive segment as inventory destocking nears completion [4] - Amkor's utilization rate is currently in the low-70s, with expectations for stronger margins as production ramps up in Q3'24 [4] - The company is expected to see a recovery in EBITDA margins from 17% in FY23 and FY24 to 19% in FY25 due to increased demand for advanced packaging and high bandwidth memory chips [4] Stock Valuation - AMKR shares have experienced a sell-off post-earnings, but this reaction may present a buying opportunity as the growth trajectory appears more favorable in the long term [5][6] - Based on FY25 forecasts, AMKR shares are projected to be priced at $37.62, reflecting an EV/EBITDA multiple of 6.54x [6] - Technical analysis suggests that AMKR shares may decline towards $26 before completing a retracement process, allowing investors to average into a position [6]

Group 1 - Wall Street analysts' recommendations significantly influence investors' decisions regarding Amkor Technology (AMKR), with an average brokerage recommendation (ABR) of 1.71, indicating a consensus between Strong Buy and Buy [1][2] - The current ABR is based on seven brokerage firms, with four Strong Buy and one Buy recommendations, accounting for 57.1% and 14.3% of total recommendations respectively [1] - Despite the positive ABR, studies suggest that brokerage recommendations often lack reliability in predicting stock price increases due to analysts' inherent biases [2][5] Group 2 - The Zacks Rank, a proprietary stock rating tool, is presented as a more reliable indicator of near-term price performance, contrasting with the ABR which is solely based on brokerage recommendations [3][4] - The Zacks Rank is driven by earnings estimate revisions, which are closely correlated with stock price movements, while the ABR may not reflect the most current information [5][6] - For Amkor Technology, the Zacks Consensus Estimate for the current year has decreased by 12.9% to $1.54, leading to a Zacks Rank of 5 (Strong Sell), indicating potential near-term stock price declines [7]

Investment Rating - The report maintains a positive outlook on Amkor, with a revenue guidance for FY2024Q3 set between $1.785 billion and $1.885 billion, indicating a sequential growth of approximately 25.6% [15][20]. Core Insights - Amkor's FY2024Q2 revenue reached $1.461 billion, showing a year-over-year increase of 0.24% and a quarter-over-quarter increase of 7.03%, driven by strong demand for advanced packaging technologies in high-end smartphones and AI solutions [4][20]. - The company successfully expanded its 2.5D packaging capacity in South Korea and received certifications for advanced SAP and memory technologies in Vietnam, supporting RAM production in Q3 [14][20]. - The automotive and industrial markets showed a revenue decline of 2% quarter-over-quarter, attributed to weak downstream demand and prolonged inventory adjustments [8][18]. - The computing market experienced a significant revenue increase of 20% quarter-over-quarter, driven by strong demand for AI devices and new ARM-based PC products [10][18]. Summary by Sections Overall Performance - In FY2024Q2, Amkor achieved a gross profit of $212 million, with a gross margin of 14.5%, slightly down from the previous quarter but up from the previous year [4][20]. - Net income for the quarter was $67 million, reflecting a quarter-over-quarter increase of 11.89% and a year-over-year increase of 4.06% [4][20]. Performance by End Market 1. **Communications Market** - Revenue share was 48%, with a 10% increase quarter-over-quarter, driven by the launch of high-end iOS models [7][11]. 2. **Automotive and Industrial Market** - Revenue share was 20%, with a 2% decrease quarter-over-quarter, primarily due to weak downstream demand [8][18]. 3. **Consumer Market** - Revenue share was 12%, with a 6% decrease quarter-over-quarter, as traditional IoT devices were phased out [9][19]. 4. **Computing Market** - Revenue share was 20%, with a 20% increase quarter-over-quarter, benefiting from strong AI device demand [10][18]. Business Developments - Amkor received a $400 million grant from the U.S. Department of Commerce under the CHIPS Act to build a new facility in Arizona, aimed at supporting advanced packaging and testing for high-performance computing, AI, communications, and automotive markets [14][21]. Q3 Performance Guidance - For FY2024Q3, Amkor's revenue guidance is set at $1.835 billion, with a gross margin forecast between 14% and 16% [15][20]. - Net income guidance ranges from $105 million to $140 million, indicating a significant quarter-over-quarter increase [16][20]. Capital Expenditure - The company anticipates total capital expenditures of approximately $750 million for the year, focusing on expanding 2.5D and SIP advanced packaging capabilities [16][20].

Core Viewpoint - Amkor Technology's Q2'24 results and guidance were below expectations, leading to an 18% drop in shares, but the company is considered to have strong value due to its market position and advanced packaging solutions [1] Company Overview - Amkor Technology is the second largest outsourced assembly and test supplier, focusing on advanced packaging solutions which account for three-quarters of its revenues [2] - The company generated $6.5 billion in revenues for 2023, with a high-single-digit revenue CAGR over recent years [2] - Major customers include Apple, QUALCOMM, Skyworks, NVIDIA, and NXP [2] Q2 Results - In Q2'24, Amkor reported revenues of $1.46 billion, flat year-over-year but exceeding analyst estimates by $10 million [3] - EBITDA was $247 million, with an EPS of $0.27, beating consensus estimates by 5 cents [3] Operating Income and EPS - EPS of $0.27 was 3 cents higher than the previous quarter and 1 cent higher than Q2 last year [4] - Operating margins expanded to 5.0%, with a capex forecast of $750 million for increasing advanced packaging capacity [4] Market Demand - Q2'24 results were driven by strong demand in the Communications and Computing end markets, particularly for advanced packaging in premium tech smartphones and AI solutions [5] - The Communications segment accounts for 48% of revenues, with a strong presence in smartphone applications [6] Manufacturing and Geopolitical Strategy - Amkor established a U.S. manufacturing facility for advanced packaging and is in discussions for up to $400 million in grants under the CHIPS and Science Act [8] - The company is diversifying manufacturing capacity across the U.S. and Vietnam, positioning itself well for semiconductor on-shoring trends [8] Financial Position - At the end of the quarter, Amkor had cash and cash equivalents of $1.5 billion and liquidity of $2.2 billion, with total debt of $1.1 billion, resulting in a Total Debt to EBITDA ratio of 1.0x [9] Valuation and Growth Potential - Analysts project EPS growth from $1.46 in 2023 to $3.20 by 2026, indicating strong long-term growth potential [12] - Amkor's current valuation at 7.6x EV/EBITDA is above its historical average, justified by industry dynamics and on-shoring trends [12]