Why This Little-Known Chip Stock Could Surge 100% In 2 Years

Key Takeaways:

• The 2-Minute Valuation Model values Ichor stock at $35 per share in 2 years.
• That’s a potential 106% upside from today’s price of $17 per share.
• The chip stock is projected to grow EPS by over 878% over the next 3 years as margins expand.
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Ichor Holdings (ICHR) is a global leader in designing, engineering, and manufacturing critical fluid delivery subsystems and components for semiconductor capital equipment.

With operations spanning the United States, Asia, and Europe, Ichor’s precision gas and liquid delivery systems are essential for semiconductor manufacturing processes across consumer electronics, automotive, and telecommunications industries.

The company is implementing a transformative strategy to qualify proprietary components across its major customer base, aiming to expand gross margin from current levels to an aspirational range of 18-20%.

Despite Q1 gross margin challenges, CEO Jeff Andreson emphasized that “the strategy is working” with component qualifications progressing ahead of schedule.

With ICHR stock now trading around $17 per share, Ichor presents a compelling turnaround opportunity for investors seeking exposure to the semiconductor equipment recovery and the company’s internal sourcing transformation.

Let’s examine why Ichor looks attractive using our 2-Minute Valuation Model.

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What is the 2-Minute Valuation Model?

Three core factors drive a stock’s long-term value:

1. Revenue Growth: How big the business becomes.
2. Margins: How much the business earns in profit.
3. Multiple: How much investors are willing to pay for a business’s earnings.

Our 2-Minute Valuation Model uses a simple formula to value stocks:

Expected Normalized EPS * Forward P/E ratio = Expected Share Price

Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.

Why the Tech Stock Looks Undervalued

Forecast

Based on analyst estimates, Ichor is expected to achieve remarkable earnings-per-share growth over the next three years as the chip maker executes its margin expansion strategy.

EPS is projected to grow from $0.18 in 2024 to $1.76 by 2027, representing an 878% total increase driven by operational leverage and proprietary component adoption.

This earnings growth for the tech stock is likely to be driven by:

• Component Qualification Milestone: By the end of 2025, all four largest customers are expected to be qualified on all three major product families (valves, fittings, substrates), marking a significant business milestone.
• Internal Sourcing Expansion: Reducing external supply from 85% in 2024 to 75% in 2025, with next-generation gas panels featuring 70% internal content versus 10% historically.
• Proprietary Flow Control Technology: First end-user qualifications underway for proprietary flow control technology, representing the largest portion of the bill of materials with the longest qualification cycles.
• WFE Market Recovery: Expected 2025 modest growth in wafer fab equipment, with Ichor positioned to outperform overall market growth.

For our valuation, we estimate that ICHR stock will reach $1.75 in EPS by 2027.

Check out Ichor’s full analyst estimates (It’s free) >>>

Is Ichor Stock Undervalued Right Now?

Ichor stock trades at around 18x forward earnings, which is below its 5-year historical average P/E of 24x, as shown in the valuation chart.

Given the company’s transformative margin expansion strategy, strategic positioning in the critical semiconductor equipment supply chain, and expected operational leverage from the adoption of proprietary components, a forward P/E multiple of 20x appears reasonable for our conservative valuation.

Fair Value of Ichor Stock

Using our 2-Minute Valuation Model and applying a conservative approach:

• Conservative 2027 EPS estimate: $1.75
• Conservative forward P/E multiple: 20x

Expected Normalized EPS ($1.75) * Forward P/E ratio (20x) = Expected Share Price ($35)

The 2-year expected ICHR stock price we would get from this valuation is $35 per share.

With Ichor stock currently trading at around $17 per share, this implies a potential upside of 106% over the next two years or a 44% annualized return.

The semiconductor stock is well-positioned to deliver outsized gains to shareholders, given that the broader markets’ average annual returns have been around 10%.

Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.

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What is the ICHR Stock Average Analyst Price Target?

Analysts are increasingly optimistic about Ichor’s growth prospects. The consensus ICHR stock target price is approximately $37 per share, indicating analysts see about 111% upside from current levels.

Risks to Consider

Despite the bullish outlook, investors should be aware of several risks that could impact Ichor’s growth trajectory:

• Execution Risk on Margin Expansion: The Q1 gross margin miss highlighted challenges in transitioning to internal component sourcing, as the company was forced to purchase more external supply than forecasted.
• Semiconductor Cyclicality: Revenue tied to wafer fab equipment spending cycles, with Q2 guidance lowered due to customer caution around tariff policies and delivery timeline shifts.
• Tariff Impact Uncertainty: Steel and aluminum tariffs are affecting costs, with final semiconductor tariff decisions expected early summer, creating business uncertainty.
• Customer Concentration: Performance dependent on major process tool customers, with the largest and second-largest customers within a few percentage points of each other.

TIKR Takeaway

Ichor Holdings presents a unique investment opportunity in the semiconductor equipment sector during a transformative period.

The potential upside for ICHR stock is driven by the progress of strategic component qualification, internal sourcing cost advantages, proprietary technology development, and positioning for a recovery in the semiconductor equipment market.

While near-term execution challenges exist around gross margin expansion, Ichor’s systematic approach to qualifying proprietary components across its entire customer base creates sustainable competitive advantages.

CEO Jeff Andreson’s confidence that “by the end of 2025, we expect to have all 4 of our largest customers qualified on all 3 of our major product families” represents a critical inflection point for the business model.

Is ICHR stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!