Needham raised its price objective for Cohu to $33.00 from $30.00 and reiterated a Buy recommendation, citing expanding opportunities in AI compute and data-center design work that are expected to add incremental revenue in 2026. The upgrade comes as Cohu shares trade at $30.00, near the top of their 52-week range of $12.57 to $34.96, and after a year-to-date gain of 52.77%.
Analysts remain broadly positive on the company, with consensus data showing a 1.2 recommendation rating. Needham’s decision to boost the target followed Cohu’s fourth-quarter 2025 report, which delivered revenue roughly in line with guidance but showed non-GAAP gross margins well below forecasts. The shortfall in margins was driven primarily by a one-time inventory charge that accounted for 350 basis points of a total 420 basis point miss.
Despite the margin setback, Cohu’s balance sheet metrics point to financial resilience. The company holds more cash than debt and reported a healthy current ratio of 4.39, indicators cited in Needham’s analysis as supporting the firm’s confidence in Cohu’s ability to navigate the temporary margin pressure. Needham also raised its forecasts for the company and recommended buying the stock on the dip created by the quarter’s results.
Cohu provided guidance for the first quarter of 2026 with revenue expected to be flat quarter-over-quarter and non-GAAP gross margins anticipated to recover to approximately 45.0%. Operationally, the company reported improved test cell utilization, up 150 basis points in the fourth quarter to reach 76%, a metric that analysts view when assessing near-term capacity use and revenue conversion.
Needham highlighted a specific design win at an analog/mixed-signal customer for data-center equipment that is forecast to contribute incremental sales in 2026. That opportunity is described as complementary to other runway areas, notably High Bandwidth Memory (HBM) and broader AI compute applications, which the firm sees as drivers of demand for Cohu’s semiconductor test and inspection products.
The financial results included a notable earnings miss: Cohu reported fourth-quarter 2025 EPS of -$0.15, versus a consensus expectation of $0.06, representing a negative surprise of 350%. Revenue, however, came in slightly ahead of estimates at $122.2 million compared with the $122.1 million analysts had expected. The gap between the EPS figure and forecast has captured attention from market participants and remains a focal point in evaluating short-term sentiment toward the shares.
Market capitalization for the company stands at $1.37 billion. Shares have shown momentum recently, rising 55.23% over the past six months. Needham’s note emphasized that the quarter’s gross-margin miss was largely attributable to one-time items and did not, in the firm’s view, alter the longer-term demand opportunity tied to AI and memory-related markets.
Summary
Needham raised its price target on Cohu to $33 while keeping a Buy rating after a quarter marked by a significant, one-time inventory charge that compressed non-GAAP gross margins. The firm pointed to a data-center design win and opportunities in HBM and AI compute as reasons to increase estimates and maintain a positive stance on the stock. Cohu posted revenue roughly in line with expectations but reported an EPS shortfall, and guided for flat Q1 revenue with margins recovering to around 45%.
Key Points
- Needham raised its price target to $33 and retained a Buy rating, citing AI and data-center opportunities.
- Fourth-quarter 2025 non-GAAP gross margins were materially below expectations due mainly to a one-time inventory charge accounting for 350 basis points of the 420 basis-point shortfall.
- Cohu expects Q1 2026 revenue to be flat sequentially with margins recovering to approximately 45.0%; test cell utilization improved to 76% in Q4.
Risks and Uncertainties
- Non-GAAP gross margins can be volatile due to one-time charges, which directly affect semiconductor-equipment profitability and could influence investor sentiment.
- Earnings-per-share performance fell well short of expectations in the reported quarter, highlighting execution or accounting items that could continue to create short-term volatility in the stock.
- Near-term revenue guidance is flat for Q1 2026; a lack of sequential growth would affect market expectations for near-term demand recovery in semiconductors and related capital equipment.
Additional data points
- Stock price: $30.00; 52-week range: $12.57 - $34.96.
- Market cap: $1.37 billion.
- Fourth-quarter revenue: $122.2 million vs. $122.1 million expected; EPS: -$0.15 vs. $0.06 expected.