SkyWater Technology SKYT shares have surged 50.9% over the past six-month period, outperforming the Zacks  Electronics - Semiconductors industry and the Zacks Computer & Technology sector’s appreciation of 11.9% and 1.1%, respectively.

Over the same time frame, it outperformed its industry peers, including Broadcom AVGO and Cirrus Logic CRUS. For the past six months, shares of SKYT have gained 30.9%, while shares of CRUS have lost 27.7%.

For investors, the question now is whether the stock has more room to run or if it’s time to cash in. Given SkyWater’s robust long-term potential and its strategic moves, holding the stock appears to be the prudent choice.

SkyWater Technology, Inc. Price and Consensus

SkyWater Technology, Inc. price-consensus-chart | SkyWater Technology, Inc. Quote

Long-Term Partnerships Bolster SKYT’s Growth

SkyWater Technology s leading the way in customer partnerships by laying a solid basis for the expansion of its commercial wafer services business, which has great potential for advanced computing and thermal imaging platforms in addition to advanced biomedical.

SkyWater Technology and Quantum-Si Incorporated QSI, the protein sequencing company, announced that they will work together to deepen their partnership to support the development of Proteus, QSI's next-generation platform that will revolutionize proteomic research.

The enlarged partnership will create the Proteus consumable that will allow for simultaneous, highly accurate large-factor protein sequencing. The partnership, which combines Quantum-Si's biotechnology expertise with SkyWater's Technology as a Service manufacturing capability, has the potential to significantly advance proteomics and protein sequencing.

SkyWater Technology makes a bold move by collaborating with Multibeam Corp., a first-of-a-kind Multicolumn E-Beam Lithography (MEBL) system for volume production. MEBL gives SKYT's customers access to a number of new production capabilities, such as full wafer patterning to support focal plane read-out ICs and other large format die types and secure chip ID for anti-counterfeit applications. Additionally, MEBL provides a wide depth of focus for high-density MOS, curvilinear photonic designs, and a variety of high-topology microfluidic and MEMS architectures.

The MB platform, with its unique configuration of multiple miniaturized electron beam columns, makes E-Beam Lithography, a revolutionary maskless lithography production system that offers compelling cost and performance advantages for today's IC fabs. These partnerships highlight SkyWater’s commitment to staying at the forefront of semiconductor innovation.

SkyWater’s Long-Term Prospects Seem Promising

SkyWater’s strategic focus on advanced packaging and specialty semiconductor solutions aligns with high-growth markets, such as artificial intelligence (AI), automotive and aerospace. Its partnerships with firms like NanoDx and the expansion of its Florida facility highlight its commitment to scaling commercial programs.

The expected $40-$50 million in tooling revenues in 2025 could bolster long-term performance, particularly as it transitions Advanced Technology Services (ATS) customers into production. If SkyWater manages operational efficiencies and diversifies revenue streams, its long-term potential remains promising. However, execution risks are significant.

Near-Term Challenges for SkyWater

Despite its recent success, SkyWater faces near-term challenges, including declining ATS revenues, which dropped 9% sequentially in the third quarter of 2024 due to funding delays in aerospace and defense programs.

Analysts are also not optimistic about its near-term prospects. The Zacks Consensus Estimate projects a revenue decline of 4.5% for 2025, with revenues expected to reach $325.6 million. Additionally, the consensus mark for the bottom line is pegged at a loss of 10 cents per share, wider than the year-ago loss of 5 cents.

Macroeconomic uncertainties, cyclical industry trends and increasing competition pose risks to the company’s short-term growth. Furthermore, SkyWater’s stretched valuation, reflected by its Zacks Value Style Score of D, suggests the stock may not currently offer the best entry point for new investors.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Zacks Rank

SKYT currently carries a Zacks Rank #3 (Hold), implying that existing investors should hold the stock while new buyers should wait for a better entry point into the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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