Back to top

Image: Bigstock

Onto Innovation (ONTO) Surges 11.4%: Is This an Indication of Further Gains?

Read MoreHide Full Article

Onto Innovation (ONTO - Free Report) shares soared 11.4% in the last trading session to close at $105.96. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.6% gain over the past four weeks.

ONTO’s rally is largely driven by optimism over solid market response for its cost-effective solutions. This avant-garde process control tools manufacturer recently announced a total order backlog of $500 million. The order backlog includes $100 million for lithography and inspection products, which are witnessing high demand in the fast-growing heterogeneous packaging sector. The company is also witnessing strong demand for its Dragon G3 Inspection system.

It has secured orders worth $12 million for the Dragon G3 Inspection system. Further, healthy projections of heterogeneous packaging within the packaging market bode well for Onto Innovation, one of the leading players in the semiconductor equipment industry. Given the robust demand environment for both front-end and back-end products with their increased adoption, it expects revenues in the range of $210-$220 million compared with the prior-guided range of $190-$200 million for the fourth quarter of 2021.

This maker of semiconductor manufacturing equipment is expected to post quarterly earnings of $1.10 per share in its upcoming report, which represents a year-over-year change of +52.8%. Revenues are expected to be $214.9 million, up 38.5% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Onto Innovation, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ONTO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Onto Innovation Inc. (ONTO) - free report >>

Published in