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For the third quarter, Nova projects revenues between $168 million and $176 million. The Zacks Consensus Estimate for the top line is pegged at $172.2 million, indicating an increase of 33.7% from the year-ago quarter’s levels.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
For the quarter, Nova expects non-GAAP earnings to be in the range of $1.60-$1.73 per share. The consensus mark for the bottom line has been steady at $1.68 per share in the past 60 days. The figure indicates a 36.6% increase from the year-ago quarter’s reported figure.
Image Source: Zacks Investment Research
NVMI’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 12.4%.
Our proven model does not conclusively predict an earnings beat for Nova this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVMI has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors to Influence Nova’s Q3 Results
Nova’s continued product expansion and steady demand across all its technologies and markets are likely to have aided third-quarter 2024 performance. In the second quarter, NVMI delivered an impressive top-line performance, with revenues increasing 27.8% year over year to $156.86 million. The results underscore Nova’s effective execution in leveraging its metrology solutions across varied semiconductor applications and processes. The trend is likely to have continued in the to-be-reported quarter.
The rapid adoption of Nova’s PRISM 2 and VeraFlex XPS platforms is anticipated to have boosted third-quarter revenues. PRISM 2 has been particularly effective in advanced packaging and high-bandwidth memory applications, which saw a record booking in the previously reported quarter.
Meanwhile, VeraFlex XPS gained traction in high-demand FinFET and advanced packaging nodes, with over 40% of orders in the second quarter from capacity expansions in these technologies. The trend is likely to have continued in the to-be-reported quarter, thereby boosting its revenues.
However, a slower recovery in some of the key end markets, such as memory and advanced packaging, is likely to have negatively impacted Nova’s sales growth in the third quarter. The anticipated recovery in memory spending is now delayed, with growth in this segment likely to pick up only by the latter half of 2025. This sluggish rebound may affect Nova’s top-line growth in the near term, particularly if the broader memory and storage markets do not accelerate as projected.
Nova’s Price Performance & Valuation
Nova stock has surged 34.7% on a year-to-date (YTD) basis, outperforming the Zacks Electronics - Semiconductors industry, the Zacks Computer and Technology sector and the S&P 500 index’s rise of 34.4%, 24% and 20.6%, respectively.
Compared with its peers, Nova stock has outperformed ASML Holding (ASML - Free Report) , Applied Materials (AMAT - Free Report) and Onto Innovation (ONTO - Free Report) . Shares of ASML Holding have declined 10.8% YTD, while Applied Materials and Onto Innovation have gained 13.2% and 15.2%, respectively.
YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let us look at the value Nova offers to its investors at current levels. Currently, NVMI is trading at a discount with a forward 12-month price-to-earnings (P/E) of 26.11X compared with the industry’s 30.29X. Its competitors, ASML Holding, Applied Materials and Onto Innovation have a forward 12-month P/E of 27.05X, 19.20X and 28.37X, respectively.
Image Source: Zacks Investment Research
Investment Thesis for Nova Stock
Nova stands out as a key player in the semiconductor metrology sector, strategically positioned to benefit from the rising demand for advanced semiconductor devices. Its expertise in precision measurement tools for semiconductor manufacturing aligns well with industry trends toward artificial intelligence, 5G and high-performance computing, which require increasingly complex chip designs.
Despite its strong position in semiconductor metrology, Nova is heavily exposed to the cyclical nature of the semiconductor industry. Slower recovery, particularly in sectors like memory, has been putting pressure on the company’s growth trajectory, evidenced by recent guidance adjustments.
Additionally, Nova’s high reliance on China, a significant revenue source, exposes it to geopolitical risks, including potential U.S. restrictions on semiconductor exports and ongoing trade tensions. Any further restrictions could materially impact Nova’s revenues, given China’s contribution to its top line.
Conclusion: Sell Nova Stock for Now
While Nova has delivered solid financial performance in the past, the company faces several challenges that may stifle its growth in the near term. Rising competition and geopolitical risks associated with its Chinese market exposure are major concerns. For investors looking for stability and growth, it might be wise to sell Nova stock now and wait for clearer signs of how the company navigates these obstacles.
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Nova to Report Q3 Earnings: How Investors Should Play the Stock
Nova Ltd. (NVMI - Free Report) is set to report third-quarter 2024 results on Nov. 7.
For the third quarter, Nova projects revenues between $168 million and $176 million. The Zacks Consensus Estimate for the top line is pegged at $172.2 million, indicating an increase of 33.7% from the year-ago quarter’s levels.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
For the quarter, Nova expects non-GAAP earnings to be in the range of $1.60-$1.73 per share. The consensus mark for the bottom line has been steady at $1.68 per share in the past 60 days. The figure indicates a 36.6% increase from the year-ago quarter’s reported figure.
Image Source: Zacks Investment Research
NVMI’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 12.4%.
Nova Ltd. Price and EPS Surprise
Nova Ltd. price-eps-surprise | Nova Ltd. Quote
Earnings Whispers for Nova
Our proven model does not conclusively predict an earnings beat for Nova this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVMI has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors to Influence Nova’s Q3 Results
Nova’s continued product expansion and steady demand across all its technologies and markets are likely to have aided third-quarter 2024 performance. In the second quarter, NVMI delivered an impressive top-line performance, with revenues increasing 27.8% year over year to $156.86 million. The results underscore Nova’s effective execution in leveraging its metrology solutions across varied semiconductor applications and processes. The trend is likely to have continued in the to-be-reported quarter.
The rapid adoption of Nova’s PRISM 2 and VeraFlex XPS platforms is anticipated to have boosted third-quarter revenues. PRISM 2 has been particularly effective in advanced packaging and high-bandwidth memory applications, which saw a record booking in the previously reported quarter.
Meanwhile, VeraFlex XPS gained traction in high-demand FinFET and advanced packaging nodes, with over 40% of orders in the second quarter from capacity expansions in these technologies. The trend is likely to have continued in the to-be-reported quarter, thereby boosting its revenues.
However, a slower recovery in some of the key end markets, such as memory and advanced packaging, is likely to have negatively impacted Nova’s sales growth in the third quarter. The anticipated recovery in memory spending is now delayed, with growth in this segment likely to pick up only by the latter half of 2025. This sluggish rebound may affect Nova’s top-line growth in the near term, particularly if the broader memory and storage markets do not accelerate as projected.
Nova’s Price Performance & Valuation
Nova stock has surged 34.7% on a year-to-date (YTD) basis, outperforming the Zacks Electronics - Semiconductors industry, the Zacks Computer and Technology sector and the S&P 500 index’s rise of 34.4%, 24% and 20.6%, respectively.
Compared with its peers, Nova stock has outperformed ASML Holding (ASML - Free Report) , Applied Materials (AMAT - Free Report) and Onto Innovation (ONTO - Free Report) . Shares of ASML Holding have declined 10.8% YTD, while Applied Materials and Onto Innovation have gained 13.2% and 15.2%, respectively.
YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let us look at the value Nova offers to its investors at current levels. Currently, NVMI is trading at a discount with a forward 12-month price-to-earnings (P/E) of 26.11X compared with the industry’s 30.29X. Its competitors, ASML Holding, Applied Materials and Onto Innovation have a forward 12-month P/E of 27.05X, 19.20X and 28.37X, respectively.
Image Source: Zacks Investment Research
Investment Thesis for Nova Stock
Nova stands out as a key player in the semiconductor metrology sector, strategically positioned to benefit from the rising demand for advanced semiconductor devices. Its expertise in precision measurement tools for semiconductor manufacturing aligns well with industry trends toward artificial intelligence, 5G and high-performance computing, which require increasingly complex chip designs.
Despite its strong position in semiconductor metrology, Nova is heavily exposed to the cyclical nature of the semiconductor industry. Slower recovery, particularly in sectors like memory, has been putting pressure on the company’s growth trajectory, evidenced by recent guidance adjustments.
Additionally, Nova’s high reliance on China, a significant revenue source, exposes it to geopolitical risks, including potential U.S. restrictions on semiconductor exports and ongoing trade tensions. Any further restrictions could materially impact Nova’s revenues, given China’s contribution to its top line.
Conclusion: Sell Nova Stock for Now
While Nova has delivered solid financial performance in the past, the company faces several challenges that may stifle its growth in the near term. Rising competition and geopolitical risks associated with its Chinese market exposure are major concerns. For investors looking for stability and growth, it might be wise to sell Nova stock now and wait for clearer signs of how the company navigates these obstacles.