Stifel adjusted its price target on Onto Innovation Inc. to $220 from $215 while keeping a Hold recommendation, reflecting growing conviction in the company's advanced packaging prospects balanced against mixed demand signals elsewhere in the semiconductor equipment market.
The stock currently trades at a price-to-earnings ratio of 60.34. InvestingPro data cited in recent commentary places Onto Innovation among names judged to be overvalued relative to the platform's Fair Value estimate and lists it on its Most Overvalued roster.
In its latest reported period the semiconductor equipment supplier posted fourth-quarter results that were slightly below expectations. Management's guidance for the first quarter was consistent with Stifel's outlook. For the second quarter the company provided revenue guidance above $300 million, which Stifel contrasted with its unchanged estimate of $305 million. Management expects the second half of the year to top results from the first half.
Market enthusiasm has been evident in the share price, with the stock delivering a 113% return over the past six months. Investors have been particularly focused on Onto Innovation's positioning in advanced packaging, which the firm and analysts view as a key growth area. An InvestingPro tip also highlights that the company carries more cash than debt on its balance sheet, an attribute that supports financial flexibility in an uncertain equipment cycle. The InvestingPro platform offers additional ProTips and an expanded Pro Research Report for users seeking deeper analysis.
On backlog visibility, the company pointed to a two-year volume purchase agreement for High Bandwidth Memory (HBM) packaging totaling $240 million, with roughly half of that volume shippable in 2026. Management also indicated that advanced nodes are tracking to mid-teens year-over-year growth, with the possibility of additional upside should demand continue to strengthen.
Stifel left its 2026 estimates unchanged, saying the potential upside from advanced packaging is counterbalanced by an incremental softening in specialty semiconductors and semiconductor lab equipment demand. The firm noted there was no substantive update on the new Gen5 Dragonfly platform, which Stifel regards as a cornerstone for Onto Innovation to regain a leadership position in advanced packaging solutions.
Other sell-side firms have moved in a more constructive direction. Cantor Fitzgerald upgraded Onto Innovation to Overweight from Neutral and raised its price target to $275. Cantor Fitzgerald projects first-half 2026 revenue in a $575 million to $600 million range, above a cited consensus of $554 million, and expects per-share earnings for 2026 and 2027 to come in at $7.00 or more and $9.25 or more, respectively.
Needham also increased its price target to $275 while maintaining a Buy rating, pointing to the company's first-quarter 2026 guidance as indicating roughly 5% sequential growth. Onto Innovation's guidance implies roughly $280 million in revenue for the first quarter and over $300 million for the second quarter, which analysts say signals stronger demand within its Advanced Packaging and Advanced Nodes businesses.
Analyst perspective
From a balance-sheet and rate-cycle resilience perspective, the company's net cash position is a positive attribute. That financial flexibility can be important for capital allocation and sustaining operations through variability in equipment spending. At the same time, analysts are watching execution on new platform development and demand trends across specialty semiconductor segments and lab equipment for signs that could alter earnings trajectories.