AECOM-Should You Buy, Hold or Sell ACM Research Stock Before Q4 Earnings?

Core Viewpoint - ACM Research (ACMR) is expected to report strong revenue growth in Q4 2024, driven by demand in the semiconductor tools market, despite facing challenges from macroeconomic uncertainties and competition [4][8][20] Financial Performance - The Zacks Consensus Estimate for Q4 2024 revenues is $188.17 million, reflecting a growth of 10.48% year-over-year [2] - The earnings estimate is 26 cents per share, indicating a decline of 39.53% from the previous year [2] - ACMR has consistently beaten earnings estimates in the past four quarters, with an average surprise of 151.52% [3] Market Demand and Product Innovation - Strong demand for semiconductor tools is anticipated, particularly in foundry, logic, power, and memory sectors, fueled by advancements in AI [4] - The company expects high wafer fabrication equipment spending in mainland China, supporting market share gains in cleaning and new product areas [5] - New products like the Ultra C Tahoe are entering mass production, enhancing cleaning performance for AI chip production [6] Competitive Landscape - ACMR is gaining market share in the U.S., Korea, Taiwan, and mainland China, bolstered by technological innovations [7] - The company is positioned to become the second supplier of commercial high-temperature sulfuric acid peroxide mixing cleaning globally, which represents about 25% of the front-end cleaning market [17] Stock Performance - ACMR shares have increased by 57.5% year-to-date, outperforming the Zacks Computer & Technology sector's return of 0.9% [12] - The stock is trading at a forward 12-month price-to-sales ratio of 1.61X, significantly lower than the sector average of 6.45X, indicating it is undervalued [9] Future Prospects - The cleaning business, which includes single wafer cleaning and semi-critical clinical equipment, addresses a market worth approximately$ 6 billion [16] - ACMR anticipates an increase in shipments of its ACP furnace, expecting to have 17 customers by the end of 2024, up from 9 in 2023, with revenue contributions expected to accelerate in 2025 [19]