After the close Monday, Piper Jaffray analyst Mike Ritzenthaler resumed coverage on battle-ground stock GT Advanced Tech(NASDAQ: GTAT) with an Overweight rating and a price target of $23.00.
Ritzenthaler sees substantial EBITDA growth over the next 2 years driven by Sapphire and is recommending owning the shares into the iPhone 6 launch.
"GTAT shares will likely react sharply to newsflow about the sapphire content of the new iPhone...," he said. The device is widely expected to be unveiled on September 9th.
The analyst expects this reaction despite recent WSJ reports that only the 64GB model will have sapphire cover glass. "We believe that Mesa process yields (though perhaps currently suboptimal) are sufficient to cover the initial production of the iPhone 6, and poised to improve over the next 6-9 months with ramping volumes," he said.
The analyst also notes that the hyper-focus on the Apple launch has, to some extent, eclipsed the impressive potential from the Merlin, Hyperion, HiCz, and HVPE/ PVD technologies. "We believe Merlin revenues could come as early as 4Q14, HiCz in 1Q15, and Hyperion and HVPE/PVD in 2H15," he said. "In the meantime, the company will likely work through the sizable backlog of ASF equipment that accumulated during the Mesa build-out. An up-cycle in solar capex may materialize by 2016, but we have elected to include only modest growth in the legacy solar segments in our model."
The firm's $23 price target is based on an EV/EBITDA multiple of 10x our FY16E estimate of $469 million, discounted to 2015 at a 20% rate.
Maar ja, misschien roept Piper (heavyweight) maar wat...