Tower Semiconductor (TSEM) is poised to meet or surpass analysts' expectations when it reports its Q1 financial results, Wedbush said in a Tuesday note.

The company has set a conservative bar for its guidance, and its peers have mostly beaten their initial guidance as the demand in the tech sector was stronger than expected, Wedbush analysts said. They added that better sales, along with a continued shift in mix, is set to benefit Tower's gross margins.

The analysts said they also expected upside potential in Q2, driven by incremental growth from new silicon photonics programs that look to ramp in late Q1 and Q2. Demand for other products is also expected to exceed expectations, in line with solid trends in mature foundry, the analysts noted.

The most important consideration for how Tower's stock does after earnings is likely the company's handling of its long-term model, according to the note.

Tower is set to announce its financial results on Wednesday.

Wedbush's rating on the company's stock is neutral with a price target of $140.

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