To serve the growing needs of the optical market, Amkor Technology Inc. AMKR has expanded its micro-electro-mechanical systems (MEMS) and Sensor package platform. These systems will be used for LIDAR, fingerprint sensing, ambient light sensing and 3D facial recognition in mobile and automotive devices.
The company remains optimistic about the automotive business, which is expected to grow in high single digits in the near term.
Coming to price performance, shares of Amkor have declined 36.6% on a year-to-date basis compared with the industry’s decline of 3.1%.
Market Growth Prospects
Amkor has been making efforts to channelize its resources to MEMS and sensors business.
Per reports from Technavio, the market is witnessing continued momentum in the adoption of optical MEMS in devices. Global optical MEMS market is expected to grow at a compounded annual growth rate (CAGR) of 7% till 2019.
Moreover, the global sensor market is expected to reach $241 billion by 2022, growing 11.3% between 2016 and 2022, per Allied Market Research. This anticipated growth of sensors will likely be driven by growing traction in Internet of Things (IoT) devices and automotive sector.
Per IOT Analytics, the number of IoT devices is expected to grow from 7 billion in 2018 to 10 billion by 2020 and 22 billion by 2025, including devices on the consumer and enterprise side.
The auto market has been growing as a percentage of Amkor’s total revenues and is a higher-margin business. Notably, Amkor continues to witness a growing number of design wins in this market, which is a positive. Given its attractive value proposition for automotive customers, the company is poised to benefit going ahead.
Amkor Technology, Inc. Price and Consensus
Amkor Technology, Inc. Price and Consensus | Amkor Technology, Inc. Quote
Amkor has a well-diversified product portfolio, which will continue to drive its revenues.
Amkor has been increasing its share in the mobile communications market. The rapid migration of features such as fingerprint sensors from the high-end to the mid-range is a big positive. Notably, in the last reported quarter, revenues of $1.14 billion increased 7.3% sequentially driven by particular strength in mobile communications.
Additionally, the company is also expanding its customer base with a particular focus on Greater China. The company’s strong market position and customer relationships in China are long-term drivers of its business.
Zacks Rank & Stocks to Consider
Currently, Amkor carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader computer and technology sector include Generac Holdings Inc. GNRC, SS&C Technologies Holdings, Inc. SSNC and Symantec Corporation SYMC. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Expected long-term earnings growth rate for Generac, SS&C and Symantec is 6.5%, 13.5% and 7.9%, respectively.
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