Group 1 - Onto Innovation Inc. shares increased over 4% in pre-market trading after Jefferies upgraded the stock to Buy from Hold and raised its price target to $170 from $100 [1] - Jefferies expressed improved confidence in Onto's ability to regain lost CoWoS market share following recent management meetings [1] - Revenue is expected to bottom in the first quarter of 2026 before reaccelerating in the second half of the year, driven by ongoing accelerator builds and tightening memory markets [1] Group 2 - Jefferies raised its earnings forecasts to $5.55 for 2026 and $7.08 for 2027, applying a 24x multiple on 2027 EPS to derive the new target [2]

Upgrades - Jefferies upgraded Onto Innovation (ONTO) to Buy from Hold with a price target of $170, up from $100, citing expected growth reacceleration in the second half of 2026 [2] - Bernstein upgraded United Rentals (URI) to Outperform from Market Perform with a price target of $1,128, up from $885, indicating a 20% upside from current levels, viewing it as a cyclical rebound and portfolio transition story [2] - Guggenheim upgraded Johnson & Johnson (JNJ) to Buy from Neutral with a price target of $206, up from $167, expressing confidence in the company's navigation of Stelara's loss of exclusivity and anticipating growth from its Innovative Medicine business [3] - Wells Fargo upgraded Omnicom (OMC) to Overweight from Equal Weight with a price target of $91, up from $78, highlighting compelling upside potential near the close of the Interpublic Group merger [4] - Wells Fargo also upgraded CoreWeave (CRWV) to Overweight from Equal Weight with a price target of $170, up from $105, noting the company's positioning to benefit from elevated build cycles and hyperscaler industry shortages into 2026 [5] - Melius Research upgraded CoreWeave to Buy from Hold with a price target of $165, up from $128 [5] Downgrades - Baird downgraded Lululemon (LULU) to Neutral from Outperform with a price target of $195, down from $225, due to low near-term confidence in growth and margin trajectory [6] - KeyBanc downgraded Lam Research (LRCX) to Sector Weight from Overweight without a price target, believing strong memory pricing may take time to drive new tool demand [6] - Citizens JMP downgraded CyberArk (CYBR) to Market Perform from Outperform without a price target, citing the pending acquisition by Palo Alto Networks and not anticipating a superior proposal [6] - Seaport Research downgraded Oklo (OKLO) to Neutral from Buy without a price target, acknowledging positives in business development but stepping aside based on valuation [6] - Jefferies downgraded Vistra (VST) to Hold from Buy with a price target of $230, down from $241, following a 160% stock run-up attributed to expectations of a Comanche Peak nuclear deal [6]

Core Viewpoint - ONTO Innovation (NYSE:ONTO) has been identified as a new long idea by Hedgeye, with a potential upside of 25% [1] Group 1: Company Performance - ONTO Innovation's stock rose by 7% following its inclusion as a long idea by Hedgeye [1] - The company is viewed as a potential recovery story, transitioning from a major underperformer to an outperformer in the upcoming year [1] Group 2: Analyst Insights - Hedgeye analyst Felix suggests that ONTO could represent significant growth potential in the metrology sector [1]

Group 1 - Onto Innovation Inc. will exhibit at SEMICON West from October 7-9, 2025 [1] - The company invites customers to booth 1229 in Hall 5, North Building, lower level [1] - Onto Innovation will showcase its latest portfolio of integrated process and process control solutions for AI device manufacturing and other markets [1] Group 2 - The exhibition will feature next-generation metrology and inspection technologies, including optical solutions [1]

Company Performance - Onto Innovation (ONTO) closed at $116.00, down 3.8% from the previous trading session, underperforming the S&P 500 which lost 0.1% [1] - The stock has increased by 12.11% over the past month, outperforming the Computer and Technology sector's gain of 5.94% and the S&P 500's gain of 2.57% [1] Earnings Expectations - The upcoming earnings report is expected to show an EPS of $0.89, a decrease of 33.58% from the same quarter last year [2] - Quarterly revenue is projected at $218.24 million, down 13.47% year-over-year [2] Full Year Projections - For the full year, earnings are estimated at $4.92 per share, reflecting a decline of 7.87%, while revenue is projected at $992.52 million, a slight increase of 0.53% from the previous year [3] Analyst Estimates - Recent changes to analyst estimates indicate a positive outlook for Onto Innovation, as these revisions often correlate with near-term business trends [3][4] - The Zacks Consensus EPS estimate has decreased by 1.11% in the past month, and Onto Innovation currently holds a Zacks Rank of 4 (Sell) [5] Valuation Metrics - Onto Innovation has a Forward P/E ratio of 24.52, which is in line with the industry average [6] - The company has a PEG ratio of 0.82, indicating a favorable valuation relative to its expected earnings growth [7] Industry Context - The Nanotechnology industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 233, placing it in the bottom 6% of over 250 industries [8]

Group 1 - TimesSquare Capital Management's "U.S. Small Cap Growth Strategy" reported a gross return of 11.28% and a net return of 11.02% for Q2 2025, underperforming the Russell 2000 Growth Index which returned 11.97% [1] - The fund's performance was driven by double-digit returns in equities as global economic activity improved [1] - Onto Innovation Inc. (NYSE:ONTO) was highlighted as a key stock, with a one-month return of 2.14% but a significant 41.42% decline over the past 52 weeks, closing at $110.98 per share with a market capitalization of $5.44 billion [2] Group 2 - TimesSquare Capital expressed a preference for critical system providers and specialized component designers within the Information Technology sector, noting Onto Innovation's role in providing high-performance control metrology and inspection systems for microelectronic device manufacturers [3] - Despite Onto Innovation's strong Q2 revenue of $253.6 million, reflecting a 5% year-over-year increase, the company's second-quarter projections fell short, leading to a 16% drop in share price [4] - The number of hedge funds holding Onto Innovation increased from 31 to 37 in the second quarter, indicating growing interest, although it was not among the 30 most popular stocks among hedge funds [4]

Core Insights - Onto Innovation Inc. has launched the Atlas G6 optical critical dimension (OCD) metrology system, designed for next-generation GAA transistors and high-bandwidth memory (HBM) applications, enhancing precision in process control [1][9] - The semiconductor industry is experiencing tighter dimensions, with manufacturers facing up to 30% reductions each cycle, necessitating precise measurements for GAA and smaller DRAM cell blocks [2] - The Atlas G6 features smaller spot sizes and improved signal-to-noise performance, crucial for measuring shrinking geometries directly on devices without compromising data quality [3] Product Development - The Atlas G6 incorporates an extra data channel and integrates with Onto's Ai Diffract OCD analysis software, utilizing machine learning algorithms to enhance recipe robustness and reduce time to solutions [4] - Onto's Dragonfly 3Di platform continues to be a key growth driver, with over 20 systems shipped in the second quarter, addressing sub-surface defect inspection needs in advanced semiconductor and AI packaging technologies [7] Market Performance - Second-quarter memory revenues remained strong, particularly in NAND, while DRAM revenues stayed near record highs; Onto secured over $20 million in new orders for Atlas OCD and Iris films, with most revenues expected in Q4 [6][9] - The company faces challenges from U.S.-China trade tensions, with tariffs expected to add $2-$3 million in costs, impacting gross margins, which are guided at 53-55% [8] Customer Base and Risks - Onto serves various markets, including Bare Wafer and Image Sensors, with unique capabilities for detecting yield-killing voids in hybrid bonding applications [5] - The company has a high concentration risk, with the top three customers accounting for 52% of its projected 2024 revenues [8]

Core Insights - Onto Innovation has launched the Atlas G6 OCD system, which features a smaller spot size and enhanced precision, specifically designed for GAA logic and HBM process control in AI devices [1] Company Summary - The Atlas G6 OCD system represents a significant advancement in technology, aimed at improving the manufacturing processes for advanced semiconductor applications [1] Industry Summary - The introduction of the Atlas G6 OCD system is expected to enhance the capabilities of AI device production, particularly in the context of GAA logic and HBM, which are critical for the next generation of semiconductor technologies [1]

Market Outlook - The company believes it is too early to have a well-informed view of market growth for 2026, as discussions with customers regarding their expansion plans are still ongoing [2] - The focus is on understanding the underlying waves of growth within the market rather than solely on the overall market trends [2] Customer Engagement - The company is actively engaging with customers to understand demand drivers and expansion plans for the upcoming year [2] - Insights from these discussions will provide a clearer picture of market dynamics towards the end of the year [2] Strategic Positioning - The company feels well-positioned to capitalize on growth opportunities within the market [3]

Summary of Onto Innovation (ONTO) 2025 Conference Call Company Overview - **Company**: Onto Innovation Inc. (ONTO) - **Industry**: Semiconductor Equipment Market Outlook - **2026 Growth**: Company is in discussions with customers regarding their expansion plans for 2026, indicating a focus on underlying growth waves rather than overall market trends [4][6] - **AI Demand**: Continuous growth in AI technology is noted, with no signs of slowing down [4] - **New Product Opportunities**: New products in 3D metrology and critical films are progressing well, with a significant market for critical films estimated at $500 million [5] Performance Insights - **Advanced Nodes Growth**: Company reported nearly 100% growth in advanced nodes, significantly outperforming peers [8][10] - **Revenue Drivers**: Growth attributed to expanding product offerings beyond traditional markets, including films and integrated metrology [9][10] Competitive Landscape - **Pricing Power**: Company is experiencing opportunities to increase prices due to advanced inspection requirements, contrary to typical pricing pressures [12][13] - **Market Share**: Company maintains strong market share across multiple HBM customers, with no significant share loss reported despite increased competition [27][28] Product Development - **Dragonfly G5 Tool**: The new Dragonfly G5 tool is expected to enhance market share in 2.5D packaging, with strong customer interest and impressive performance feedback [15][16][17] - **Hybrid Bonding**: The tool will address concerns over voids in hybrid bonding, presenting new opportunities for high-resolution inspections [19][20] Strategic Initiatives - **Semilab Acquisition**: Acquisition aims to enhance capabilities in surface charge metrology and materials characterization, with potential synergies expected [35][36] - **Market Growth in Materials Characterization**: Growing interest in materials characterization as advanced packaging and exotic materials become more prevalent [38][41] Financial Performance - **Gross Margin**: Current gross margin is below the long-term target of 56%-57%, with plans to improve through supply chain efficiencies and new product introductions [44][45] - **Capital Allocation**: Company prioritizes M&A as a key strategy for capital allocation, focusing on synergies and core competencies [53][55] Future Outlook - **Technology Transitions**: Company is focused on expanding its footprint across various markets rather than fixating on specific technology transitions [48][49] - **Packaging Investments**: Significant investments in packaging are anticipated, with a strong position in the market due to advancements in heterogeneous die and panel technology [50][51] Conclusion - **Investor Sentiment**: Company believes there has been an overreaction to competitive pressures, asserting confidence in its ability to maintain market position and drive growth through new product adoption [57]