JP Morgan upgrades advanced wafer probing card maker Cascade Microtech (CSCD) to overweight from neutral.
Analyst Murali Abburi upgrades on the stock's compelling valuation, and his increasing comfort with the growth story of the probe card business.
He notes strong 22 cents first-quarter earnings per share (including a benefit from a favorable tax rate) beat his and consensus 13 cents estimate. He says first-quarter probe card revenues increased 86% year-over-year, and he believes they are continuing to gain traction with customers, on pace to grow over 70% this year.
Even valuing Cascade Microtech solely on its probe systems business, Abburi believes shares are trading at a substantial 40% to 50% discount to its peers on p-e and P/TBV (share price divided by tangible net assets) basis. Also, Cascade has $47.8 million in cash, or $4.10 per share.