DA Davidson raised its price target on PDF Solutions Inc. (NASDAQ:PDFS) to $38 from $36 and kept a Buy rating on the shares. The revised target equates to approximately 16% upside from PDF Solutions' then-current trading price of $32.84. The research note from DA Davidson anchors the new valuation to a multiple of 24 times estimated 2026 EBITDA.
The upgrade follows fourth-quarter 2025 results that exceeded consensus revenue expectations and matched DA Davidson’s internal estimates. The firm highlighted PDF Solutions’ continued ability to monetize its chip-industry expertise and to broaden its product set during the period. Independent data from InvestingPro shows the company delivered 22.04% revenue growth over the trailing twelve months and that it has maintained a strong five-year growth trend.
PDF Solutions' guidance for 2026 signals persistent top-line expansion, with the company forecasting revenue growth above 20% year-over-year. DA Davidson models 21% year-over-year revenue growth for 2026, and attributes the momentum to an ongoing increase in volume-based revenue plus additional deployments of its e-Probe systems. The analyst note also identifies upside potential tied to the possibility of earlier-than-expected system launches and cross-selling within the customer base.
Profitability remains a work in progress. PDF Solutions was not profitable over the last twelve months, according to the data cited, but InvestingPro Tips referenced in the research indicate net income is anticipated to increase during the current year, with analysts forecasting a return to profitability in 2026.
In separate disclosures covering results for the fourth quarter of 2025, PDF Solutions reported earnings per share of $0.30, above consensus expectations of $0.23. Revenue for the quarter came in at $62.4 million versus the anticipated $62.35 million, representing a modest beat. DA Davidson and the company viewed these figures as evidence of operational strength and an ability to outperform market forecasts.
Despite the earnings and revenue beats, the company’s shares experienced a decline at the close of trading on the day of the report; that price movement was noted but not emphasized in the firm’s analysis. InvestingPro’s proprietary Fair Value model, cited alongside the research, suggests the stock may be slightly overvalued relative to that model’s estimate.
Investors assessing PDF Solutions will find a blend of reinforcing signals and outstanding items: robust revenue growth and encouraging guidance on one hand, and a lack of trailing profitability on the other. DA Davidson’s updated valuation and its scenario for 2026 are built on multiple drivers the firm sees as credible, including volume ramps, system deployments, and cross-sell opportunities.
Summary
DA Davidson increased its PDF Solutions price target to $38, citing stronger-than-expected Q4 2025 revenue, a solid multi-year growth profile, and 2026 guidance that points to more than 20% revenue growth. The target is based on 24x 2026 EBITDA and implies around 16% upside from the then-current share price of $32.84. The company beat EPS and revenue estimates for the quarter, while InvestingPro data shows 22.04% trailing-12-month revenue growth.
Key points
- DA Davidson raised its price target to $38 from $36 and retains a Buy rating on PDF Solutions.
- PDF Solutions reported Q4 2025 EPS of $0.30 versus $0.23 expected, and revenue of $62.4 million versus $62.35 million expected.
- Company guidance and DA Davidson modeling point to 2026 revenue growth north of 20%, with DA Davidson projecting 21% year-over-year growth.
Risks and uncertainties
- Profitability: The company was not profitable over the last twelve months, and while analysts expect net income to grow this year and profitability in 2026, that outcome remains a forecast rather than a reported fact - this affects investor returns and valuation.
- Valuation tension: InvestingPro’s Fair Value model indicates the stock may be slightly overvalued relative to its intrinsic estimate, which could limit near-term upside despite the raised target.
- Execution-related variables: DA Davidson’s upside case depends in part on earlier-than-expected system launches and successful cross-selling, both of which are execution-sensitive and could influence revenue realization and timing.
Sectors impacted - semiconductor equipment and enterprise software/services tied to chip manufacturing, as well as growth-oriented technology investors and institutional research consumers.