Amkor (AMKR) Earnings Preview
Amkor Tech (AMKR) reporting tonight after the close and strong history (higher seven of the last ten) for the name that has 6250 May $24 calls in open interest and plenty of near-term tailwinds. The average closing move for shares has been 6.75% and a max move of 34.66%, so some potential for volatility. The current implied move is 10%. The Street is looking for $0.46 on $1.32B, a 14.5% increase Y/Y, while next quarter is guided to $0.43 and $1.35 and the FY $1.93/$5.69B. The $5.63B company trades 13.3X earnings, 1.12X sales, and 6.77X cash with a 0.67% yield. AMKR provides semiconductor packaging and test services such as wafer bump, wafer probe, package design, and test and drop shipment services. AMKR has a number of tailwinds into 2021 and beyond that should help drive guidance higher. As semiconductor content in devices like industrial settings, 5G, and autos continues to grow, AMKR benefits. In February they noted that 5G is a big driver with higher content in 5G phones growing. IoT, data centers, infrastructure, storage and personal computing are also notable end-markets. They have been working on better factory utilization and cost-controls which should continue to boost profitability as well. Analysts have an average target for shares of $15.25 with a Street High $16. Citi positive raising estimates in February as a premium to historical multiple is warranted given improved sales diversification and balance sheet. However, rising competition in advanced packaging could hurt Amkor’s gross margins long term. Deutsche Bank has a Buy rating on the name citing strength in advanced packaging and better than expected demand in communications and auto/industrial. Short interest is 1.37%. Hedge fund ownership fell 2.5%.