GT Advanced Tech (GTAT) Outlook Still Conservative Given Robust Market Potential - Goldman

March 17, 2014 7:00 AM EDT Send to a Friend
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    4 Buy, 8 Hold, 3 Sell

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Goldman Sachs maintains its Buy rating on GT Advanced Technologies (Nasdaq: GTAT) following the company's New Product and Technology Briefing on March 14 in Boston.

Analyst Brian Lee noted the following key takeaways:
  1. GTAT affirmed its EPS goal of over $1.50 by 2016, though Goldman sees the estimate is conservative given the $4 to $5 billion market opportunity that awaits before factoring in its Apple (Nasdaq: AAPL) deal;

  2. GTAT expects a $1bn/$800mn/$1.6bn total available market (TAM) for its SDR 1-K polysilicon reactor, DSS G8 tools, and HiCz, respectively. The analyst was encouraged by GTAT's tone on poly recovery, which is being bolstered by its recent $336 million supply agreement with Cosmos. Additionally, GTAT’s new Merlin product (2015 launch) is expected to reduce total installed solar cost by >10% by improving efficiency (+0.7%) and reducing silver paste usage (-80%); GTAT expects a potential $400mn-$1bn opportunity by 2018, said the analyst; and

  3. GTAT could see large upside from Hyperion. GTAT expects its PVDNC/HVPE solution can drive down MOCVD capex, while targeting a $160mn TAM by 2019 and beta tools in 4Q14, the analyst said. Hyperion will initially address solar, but will eventually move to different applications over time, including sapphire lamina. The analyst doesn't see sapphire lamina being included in the upcoming Apple iPhone 6. Apple received an patent covering sapphire laminate in September 2013. Hyperion is expected to address at least an $800mn TAM with upside toward $4bn by 2018, depending on application, the analyst concluded.
For an analyst ratings summary and ratings history on GT Advanced Tech click here. For more ratings news on GT Advanced Tech click here.

GT Advanced Tech closed at $16.81 last Friday..


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