BE Semiconductor Industries (Besi) recovered a portion of recent losses on Friday, with the stock climbing in excess of 4% after Morgan Stanley reasserted its positive view of the company. The rebound came after a sharp reaction to the company’s guidance earlier in the week.
On Thursday Besi published results and an outlook that Morgan Stanley described as broadly in line with expectations. Still, the stock plunged 7.5% following the release, a move the Wall Street bank attributed to a "lack of positive revisions or surprises," in a note led by Nigel van Putten.
Despite the near-term market response, Morgan Stanley said its investment case "remains intact" and characterized the pullback as a buying opportunity, raising its price target to 190 euros from 185 euros.
Besi’s guidance called for sequential revenue growth in the first quarter of 2026 of 5-15%, a range Morgan Stanley and consensus had broadly expected. The outlook did not appease some investors after the stock had already rallied roughly 30% year-to-date, amplifying the share price reaction.
In light of the results and the order environment, Morgan Stanley increased its earnings-per-share forecasts by 4% and 2% on the respective horizons cited in its note. The analysts pointed to several supportive factors behind the revisions: wider adoption of thermal compression bonding (TCB), stronger gross margins and a lower share count.
Central to the bank’s positive stance is a growing order backlog. Morgan Stanley estimates Besi’s backlog now tops 00 million, saying it "sets up sharply accelerating growth in coming quarters" driven in large part by AI-related demand for advanced packaging.
The analysts highlighted that AI demand is already underpinning "meaningful strength" in 2.5D packaging and photonics, two areas where customers continue to invest to satisfy rising compute requirements. According to the note, those segments together represent roughly half of Besi’s revenue base.
However, Morgan Stanley expressed more caution on hybrid bonding near term. The bank expects adoption to progress gradually until a major customer brings a mainstream product to market that uses the technology. In the analysts’ model, tool shipments rise to 45 in fiscal 2026 from 38 in 2025, with further upside contingent on orders tied to high-bandwidth memory.
Looking beyond the immediate quarter, Morgan Stanley said market attention may shift toward the second quarter of 2026, when it forecasts a 59% year-on-year revenue increase.
Key points
- Morgan Stanley reiterated a positive investment case for Besi and raised its price target to 190 euros from 185 euros, calling the recent pullback a buying opportunity.
- Besi guided for 5-15% sequential revenue growth in Q1 2026; the range was broadly in line with Morgan Stanley and consensus expectations.
- The bank cited a backlog above 00 million and AI-driven demand in 2.5D packaging and photonics as key supports for accelerating growth.
Risks and uncertainties
- Near-term investor reaction to guidance can cause sharp share price moves - this impacts equity markets and investor sentiment toward capital equipment providers.
- Adoption of hybrid bonding is uncertain in the near term and may progress only gradually until a major customer launches a mainstream product - this affects demand timing for specific tools and the semiconductor equipment sector.
- Tool shipment assumptions and potential upside hinge on high-bandwidth memory orders, creating uncertainty in midstream equipment revenue forecasts.