Shares of Tower Semiconductor surged 5.9% amid optimistic broker forecasts and strong earnings, though recent insider sales provide a cautious backdrop to the upbeat outlook.
Tower Semiconductor shares rose 5.9% on Friday, climbing as high as $230.29 before easing slightly, after a session that saw far lighter trading than usual. MarketBeat said volume totalled 283,536 shares by mid-day, well below the company’s average daily volume of 2,262,747, suggesting the move happened on relatively modest participation. The stock had closed at $217.28 in the previous session.
The latest advance came against a backdrop of continued optimism from Wall Street. Barclays recently began coverage with an overweight rating and a $310 target price, while Mizuho initiated coverage with an outperform call and a $300 target. Benchmark and UBS have also kept buy ratings in place, and Bank of America has set the highest target cited by MarketBeat at $367. Across the broker notes tracked by the site, Tower Semiconductor carries a moderate buy consensus, with an average target price of $290.67 to $316 depending on the data set referenced.
The company’s most recent earnings update helped underpin that view. Tower Semiconductor reported adjusted earnings of $0.88 a share for the quarter ended August 4, beating the $0.76 consensus estimate, while revenue of $460.08 million also topped forecasts. Sales rose 23.7% from a year earlier, and the company reported a net margin of 16.94% and a return on equity of 9.83%. Analysts surveyed by MarketBeat expect full-year earnings of $3.59 a share.
Even so, recent insider sales may temper some enthusiasm. Chief executive Russell Ellwanger sold 104,226 shares on August 11 at an average price of $248.34, while director Yoav Chelouche sold 232 shares on September 10 at $215.06. MarketBeat said insiders have sold 181,767 shares over the past three months and now hold about 1.00% of the company. Institutional investors, by contrast, continue to own the bulk of the stock, with MarketBeat putting that figure at 70.51%.
Tower Semiconductor is a speciality foundry that makes integrated circuits for fabless chip designers, semiconductor makers and original equipment manufacturers. Its portfolio spans radio-frequency and high-performance analogue chips, power management, image sensors, medical and industrial sensors, silicon photonics and MEMS, or microelectromechanical systems, which are tiny devices combining mechanical and electrical components on a single chip. The company’s focus on analogue and mixed-signal technologies differentiates it from higher-volume digital chipmakers and leaves it exposed to demand trends in a narrower set of markets.
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