What Happened?
Shares of semiconductor photomask manufacturer Photronics (NASDAQ: PLAB) fell 13.2% in the morning session after the company reported weak first-quarter 2025 (fiscal Q2) results: Its revenue guidance for the next quarter missed, and its EPS fell short of Wall Street's estimates. The slowdown showed up in both key areas like chip and display masks, which dragged revenue down 3% from the previous year.
Margins slipped a bit too, as lower factory usage and higher costs cut into gross profits. That hit the bottom line: EPS dropped and fell short of expectations.
Looking ahead, the company expected revenue and profits to dip again, which won't do much to ease investor concerns. Overall, this quarter could have been better.
Separately, Photronics announced a leadership change, with George Macricostas stepping in as CEO after Frank Lee stepped down.
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What The Market Is Telling Us
Photronics’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Photronics and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 20.3% on the news that the company reported strong third-quarter results, which blew past analysts' EPS expectations, driven by revenue and profit outperformance vs Wall Street's estimates.
The results marked a sharp rebound from the slower growth in the previous quarter. Revenue rose sequentially in the fourth quarter, fueled by stronger sales of Integrated Circuits (ICs) and Flat Panel Displays (FPDs). Notably, IC sales surged in the United States, while demand for FPDs showed steady growth across multiple regions.
Guidance was also solid, with next quarter's revenue outlook ahead of expectations while EPS was in line, suggesting the improved trend will continue.
Overall, we think this was a good quarter, especially considering some of the uneven recent earnings performance across the sector.
Photronics is down 27.2% since the beginning of the year, and at $17.48 per share, it is trading 37.7% below its 52-week high of $28.06 from December 2024. Investors who bought $1,000 worth of Photronics’s shares 5 years ago would now be looking at an investment worth $1,528.
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