Semiconductor equipment vendor Aehr Test Systems beat Wall Street's targets for its fiscal third quarter, thanks to strong demand for gear to test power chips for electric vehicles. But its outlook for the current quarter disappointed. Aehr stock fell hard on Friday.
The Fremont, Calif.-based company late Thursday said it earned an adjusted 16 cents a share on sales of $17.2 million in the quarter ended Feb. 28. Analysts polled by FactSet had expected Aehr earnings of 14 cents a share on sales of $16 million. On a year-over-year basis, Aehr earnings rose 45% while sales increased 13%.
For its fiscal year ending May 31, Aehr reiterated is guidance for sales of at least $60 million to $70 million. That would represent growth of at least 18% to 38% year over year. It said profit margins would be similar to last year.
However, its implied sales goal for the current quarter is $22.3 million, which is below Wall Street's estimate of $23.6 million.
Aehr Stock Falls After Report
On the stock market today, Aehr stock sank 16.7% to close at 31.02. Earlier in the session, it had plummeted as much as 18.7% to 30.26.
Aehr makes semiconductor test and reliability qualification equipment. Its recent growth has come from systems for test and burn-in of silicon carbide, or SiC, power chips, mostly for electric vehicles. Burn-in is a stress test of a component to detect problems.
"Aehr had another great quarter, with revenue and net income ahead of consensus estimates," Chief Executive Gayn Erickson said in a news release. "Our momentum in silicon carbide wafer level burn-in continues to grow."
In addition to silicon carbide chipmakers, Aehr is working with several gallium nitride semiconductor suppliers. Those gallium nitride chipmakers are making products such as radio frequency and power devices.
"We believe gallium nitride will be a significant market," Erickson said. It will be driven by high-volume applications such as radio-frequency amplifiers, consumer electronics power converters and chargers, solar power inverters, and charger and converter applications for electric vehicles, he said.
Longer term, Aehr is enthusiastic about making test and qualification gear for the emerging silicon photonics market, Erickson said.
Aehr Stock Is On Two IBD Lists
Aehr stock has a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. That puts it in the top 1% of stocks based on key fundamental and technical measures over the past 12 months.
Further, Aehr stock is on the IBD 50 and IBD Tech Leaders stock lists.
On March 22, Aehr stock broke out of a fourth-stage consolidation pattern with a buy point of 37.67, according to IBD MarketSmith charts. It notched a record high of 40.69 the next day before pulling back.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
