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Advanced Energy AEIS is leaving no stone unturned to bolster presence in industrial markets through acquisitions and product expansion.
The company’s recent acquisition of Tegam, a metrology and calibration instrumentation provider, for $18 million in cash is a testament to the aforesaid fact.
Based in Ohio, Tegam is a provider of radio frequency (RF) power instruments and calibration systems used in semiconductor and advanced industrial markets. Notably, net revenues generated by Tegam in fiscal 2020 were nearly $10 million.
Advanced Energy’s latest buyout follows the acquisition of Versatile Power, a leading provider of RF and programmable power supplies for medical as well as industrial applications.
The acquisition strengthened Advanced Energy’s presence in various industries including semiconductor equipment, industrial, manufacturing, telecommunications, data center computing and healthcare.
Advanced Energy Industries, Inc. Price and Consensus
Advanced Energy Industries, Inc. price-consensus-chart | Advanced Energy Industries, Inc. Quote
Buyouts Boost Advanced Energy’s Prospects
The buyout of Tegam will boost Advanced Energy’s presence in process power, as Tegam’s technologies will help in precise control, and repeatability of RF power delivery in plasma etching and deposition processes.
The latest move will bolster the company’s presence in the growing global industrial power supply market, which, per a report by ResearchAndMarkets.com, is expected to hit $14.3 billion by 2027, witnessing a CAGR of 5.1% between 2020 and 2027.
This market has been driven by rising demand for industrial power supply in the United States, India and China. Also, the booming consumer electronics and lighting sector aided by industrial automation in the United States and China is expected to propel the market.
Moreover, Tegam’s products will contribute to Advanced Energy’s product portfolio and drive its top-line growth in the near term.
The acquisition is anticipated to be accretive to Advanced Energy’s earnings for the current year.
Expanding Power Solutions
The latest deal bodes well for Advanced Energy’s growing efforts toward strengthening the product portfolio. The company has also expanded the product portfolio by launching new products.
Recently, Advanced Energy introduced AVD200-48S12, an ultra-small, high power density DC-DC power converter. Its efficient and cost-reducing feature makes it suitable for 5G digital communication modules, power-over-ethernet, and optical network applications in telecommunications as well as data communications.
Also, the company launched the Artesyn AIF06ZPFC series, a power factor correction module. It has greater efficiency and advanced features suitable for high-voltage equipment such as medical devices, unmanned aerial and terranean vehicles as well as industrial applications.
Advanced Energy also introduced a new product, Paramount HP 10013 power generator, in the Paramount RF power generator product group, which is used for semiconductor and industrial thin-film applications.
Markedly, Advanced Energy’s robust product portfolio comprising plasma power generators, high and low voltage power solutions, remote plasma sources, and other products will continue to shape its growth trajectory and sustain momentum in various industries.
Notably, growing traction across enterprise computing customers and prospects related to 5G is likely to remain key growth drivers in the near term. However, coronavirus-led supply chain constraints are concerns. Further, weak momentum across data centers, and telecom and networking markets remain overhangs.
Zacks Rank & Stocks to Consider
Currently, Advanced Energy carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector include MACOM Technology Solutions MTSI, Maxim Integrated Products MXIM and Microchip Technology MCHP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks#1 Rank (Strong Buy) stocks here.
Long-term earnings growth rates for MACOM, Microchip, and Maxim are currently projected at 37%, 15.3% and 10%, respectively.
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