Key Points
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He feels the company is well-positioned to capitalize on the current feverish build-out of AI capacity.
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He’s also flagged it as a business that can weather semiconductor sector dips.
- 10 stocks we like better than Cohu ›
On Thursday, an analyst’s rather bullish initiation of coverage on Cohu (NASDAQ: COHU) stock clearly resonated with the market. Investors took that pundit’s advice to heart, pushing the semiconductor diagnostics company’s shares to an almost 6% share price gain that trading session.
Brought in as a buy
Just after Wednesday’s market close, Baird’s Quinn Fredrickson initiated his tracking of Cohu stock by pronouncing it an outperform (i.e., buy). He also set a price target of $65 per share for the highly specialized tech stock, anticipating nearly 18% upside to its current level.
Fredrickson’s optimistic stance is based largely on Cohu’s enviable potential as a participant in the artificial intelligence (AI) revolution, according to reports. The analyst believes the company could draw numerous revenue streams from this, thanks to its involvement in a wide range of activities. These include, but aren’t limited to, software analytics, power management, and hardware testing.
The analyst added that even if the broader semiconductor market were to soften, Cohu would still be quite a viable medium to long-term play, as it’s a go-to company in its specialized segment.
Artificial intelligence and real-world potential
I’ve always been fond of a quality pick-and-shovel stock, and Cohu certainly qualifies. The types of services it offers are crucial to the validation of high-end hardware setups, and as such they are invaluable to companies aggressively building out their AI capabilities. I’d agree that the stock looks like a buy, and I wouldn’t be surprised if it well exceeds that $65 per share price target.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
