Although the demand environment for some of our semiconductor customers is improving compared to a soft first quarter, the wafer inventory recovery seems to be lagging that improvement a bit because of their days of inventory.
Q1 reported 71c vs. consensus of 69c while guidance given for Q2 was $460M-$470M vs. consensus of $465.56M
Now, with positive momentum building, WFR is poised to test its old highs very soon. It remains the top play with the polysilicon shortage and increasing demand. As companies build up their solar farms to meet alternative energy initiatives, polysilicon remains in increasing demand. With margins near 50%, WFR is poised meet this demand to boost Q2 EPS. According to Thomson/First Call and the 14 analysts covering it, mean target is 71, median 75, high 80, and low target at 53.
Other recent near term catalysts include a Share Repurchase Program of $500m announced on May 16th. This is a first for the company and is a good vote of confidence to its shareholders. Also, on May 22nd it was announced that WFR will be added to the S&P 500.
With positive news momentum post its Q1 report, and a potential turnaround in the overall semi sector, WFR should be a top pick and begin to outperform.
Disclosure: Author has a long position in WFR
WFR 1-yr chart