The research note from GS was more positive on Apple sapphire screens as well as additional equipment orders including Hyperion for 2016. EPS estimate increased to $1.94 for 2016 and price target raised from $20 to $24.
Additionally Goldman sees the potential for Hyperion to add “well over $1 EPS” to GTAT’s bottom by 2018 assuming 150 tools are sold and they believe “little if any of Hyperion’s future value is currently being reflected in GTAT’s shares”.
Goldman is tracking 150MT or $2B of announced polysilicon projects and GTAT is the leading Poly equipment supplier globally with over a 50% market share.
Update: GTAT bid ask $18.05 v $18.18 as of 7:20 ET 5,900 shares traded
The Apple mosaic is building momentum. In recent weeks, we see a positive read-across for GTAT from (1) sapphire processing equipment vendors in Europe – we believe for display covers – plus (2) reports of more Apple-related sapphire developments (e.g. fab expansion, patent). Deep dive suggests upside in equipment. We raise our 2015-16E EPS to $0.98/$1.94 solely on higher equipment volumes. On top of a potential poly capex recovery, we see $300-$400mn of “new” equipment upside by 2016
owing to monocrystalline tools and greenfield technology (Hyperion).
Against this backdrop, we believe recent Apple-related data points continue to trend positive and with our 2015E-16E estimates moving higher on the back of new equipment opportunities, we reiterate our Buy on GTAT with c.40% upside to our new $24, 12-month price target.Advertisements