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Advanced Energy Buys Tegam for $18M, Boost RF Power Offerings

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Advanced Energy (AEIS) has acquired Tegam in an all-cash deal valued at $18 million. The semiconductor manufacturing company sells engineered precision power conversion, measurement, and control solutions on a global basis.

Tegam Inc. provides metrology and calibration instrumentation used in semiconductor and advanced industrial markets.

The addition of Tegam enhances Advanced Energy’s RF process power offerings and calibration systems. Furthermore, the deal expands the company’s presence in several advanced industrial markets.

The acquisition also has certain financial benefits. It is expected to be accretive to the company’s adjusted earnings this year.

Advanced Energy CEO Steve Kelley said, “As the pure play power leader, we are committed to delivering complete solutions to our customers. With this acquisition, we further extend our leadership in RF power by adding TEGAM’s industry-leading metrology and calibration technologies that contribute to the precise control and repeatability of RF power delivery in plasma etch and deposition processes.” (See Advanced Energy stock analysis on TipRanks)

On May 5, Susquehanna analyst Mehdi Hosseini maintained a Buy rating and a price target of $125 (20.8% upside potential).

Hosseini said, “Reducing CY21 EPS estimates following Mar-Q report to account for the adverse impact from supply shortages, which appears to have hit AE’s DC/Telecom segments more than Semis. Perhaps, the tight component supply has made it more challenging for AE to plan, especially now that it has to forecast demand for four vastly different end markets. All in all, our thesis remains intact assuming the recent component shortage won’t lead to share loss among DC/Telecom customers.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 Buys versus 2 Holds. The average analyst price target of $120.67 implies 16.6% upside potential to current levels. Shares have increased 5.7% over the past six months.

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