Ultra Clean Holdings: Double-Digit Upside Potential With Positive Reward/Risk
- Thanks to a stock slump induced by semiconductor industry weakness, lower guidance and stock sales by UCTT's acquisition counterparty, the stock now prices in negative growth rates.
- UCTT offers a very attractive reward/risk with up to 50% target price upside based on just 5% annual FCF growth.
- Several catalysts exist for positive sales and operating leverage growth.
- New dedicated team focused solely on new business opportunities is bearing fruit, promising future sales growth and diversification out of semiconductors and gas delivery systems.
- $10B merger of the largest customer, Applied Materials, with Tokyo Electron could bring new business with Tokyo Electron in the long run.