$ONTO Innovation jumps after upgrade at Stifel

Shares of semiconductor equipment maker Onto Innovation (ONTO) surged about 7% premarket on Friday after Stifel upgraded the stock to Buy from Hold.
The firm increased the price target on the stock to $350 from $220.
"We were surprised by the muted reaction to Onto Innovation's 1H +pre-announcement and even more so the qualification of its new Gen5 Dragonfly system for 2.5D advanced packaging. There may be some uncertainty on who this customer is. Yet through our concurrent field checks, we learned that Onto recently passed TSMC’s New Tool Selection Committee (NTSC), a key hurdle/milestone that should corroborate that the new qualification is with TSMC (TSM)," said analysts led by Brian Chin.
The analysts noted that Onto has now announced wins/qualifications at two major accounts for Dragonfly, its new high-end advanced packaging inspection/metrology platform. While unnamed, the analysts believe these customers are SK Hynix (HXSCL) (HBM4) and Taiwan Semiconductor Manufacturing (TSM) (2.5D CoWoS).
"Incremental growth catalysts 2H26 into 2027 include: 1) potential Samsung VPA (volume purchase agreement) – core DRAM fab/packaging customer, very high share of OCD [Optical Critical Dimension] metrology in foundry (Taylor fab); 2) TSMC investing in GAA [Gate-All-Around] 2/1.6nm nodes and CoPoS [Chip-on-Panel-on-Substrate] panel packaging – more process control intensive, view Onto well-positioned to capitalize in 2027-28, and 3) More broadly, Industry WFE [Wafer Fabrication Equipment] apt to grow +25-30% this year, +20% next year (has upside) – view Onto CAGR [Compound Annual Growth Rate] 2025-27 above WFE," said Chin and his team.