Sunday, March 21, 2021

A Small Cap Equity holding: Axcelis Technologies, Inc (ACLS, $40.90): "Axcelis Has Put Away the Salsa, Uncertain of When the 'Chip' Shortage Will End" by: Graham Pedersen, AIM Student at Marquette University

 Axcelis Technologies, Inc (ACLS, $40.90): "Axcelis Has Put Away the Salsa, Uncertain of When the 'Chip' Shortage Will End"

By: Graham Pedersen, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


• Axcelis Technologies, Inc. (NASDAQ:ACLS) designs, manufactures, and services ion implantation and other processing equipment used to fabricate semiconductor chips. The company was founded in 1978 and is headquartered in Beverly, MA. 

• During the ongoing pandemic, ACLS realized a 140% increase in operating income on a 38% increase in sales. 

• ACLS announced its first shipment of their new Purion H200 SiC Power Series implanter. 

• ACLS reported Q4 2020 earnings of $0.43 per share, compared to earnings of $0.29 per share in Q4 2019. 

• ACLS delivers new product extension capabilities enabling technology application in an emerging image sensor industry. 

Key points: 

ACLS's revenue in FY20 was $474.6 million, up from $343 million in FY19, a 38% increase. The company's systems revenue was $293.6 million, up 45% from $202.6 million in 2019. CS&I revenue was $181 million, up from $140.4 million the previous year, a 29% growth.

The Purion H200 is the first single coating high current implanter designed to cover all large dose implant applications. It is particularly well suited to the needs of foundries and power system manufacturers. The Purion H200 combines the productivity of high current tools with the precision and accuracy of medium current implanters, thanks to its innovative scanned spot beam design, which is based on the industry-proven Purion H high current beamline.

ACLS reported Q4 2020 earnings of $0.43 per share, beating the consensus estimate of $0.32 per share, representing an earnings surprise of 34.37%. ACLS posted $122.2 million in revenues for the quarter ending December 2020, surpassing the consensus estimate of $105.74 million. ACLS showed revenue growth of 13.5% year-over-year, and its price-to-earnings ratio is currently 32. The business has outperformed consensus EPS forecasts three times in the last four quarters.

The new Purion XEmax was created for high-performance image sensor applications that are just getting started. Multiple filtration systems are used in the upgraded beamline to eliminate energetic metal pollutants that could otherwise affect dark current and white pixel count levels. The new device is based on Axcelis' proprietary Boost Technology, which delivers beam energies and is installed on the cutting-edge Purion XE platform.

What has the stock done lately?

On Monday, Mar 15, ACLS reached a new 52-week high of $44.20, representing a 4.03% increase. The company's market cap is now $1.44 billion. From year to date, Axcelis shares have risen 33.2%, compared to 4.3% for the S&P 500. The stock's 50-day moving average is $37, and its 200-day moving average is $28.67. The Q1 2021 consensus EPS forecast is $0.34 on revenues of $126.4 million and $1.85 for the current fiscal year on revenues of $532.6 million.

Past Year Performance: 

Shares of Axcelis Technologies, Inc. have been trading within a range of $44.20 and $12.99 over the last 52-week period. ACLS has experienced a YTD gain of 46.12%, with a 52-week beta of 1.89. ACLS was closely following the Russell 2000 (Figure 1), although, when ACLS fell in early August, the Russell 2000 held firm and continued higher. ACLS has outperformed the benchmark from year-to-date, producing a 52-week gain of 154.64%, compared to that of the benchmark at 109.63%.

Source: FactSet

My Takeaway

With the growing uncertainty of how long the chip shortage will last, it’s hard to get behind companies involved in the production process. Due to businesses requiring a license to ship materials to China-based SMIC, the global impact worsens. With only two successful shipments of products year to date, Axcelis is floating in stagnant waters. Although it is unknown how long this shortage will last, Axcelis remains well-positioned to make a full recovery when this trade war comes to an end. Because of consistent EPS beats, annually growing financials, and industry-leading technology, I believe ACLS represents a hold in the AIM small-cap equity fund. 

Source: FactSet