Cascade Microtech BUY

CSCD : NASDAQ : US$11.92 BUY 
Target: US$15.00

COMPANY DESCRIPTION:
Cascade Microtech is a leading developer of advanced
wafer probing solutions and production probe cards used
in the measurement and testing of semiconductor
integrated circuits. Cascade customers use its products
to perform testing of chips while in wafer form in both
engineering and production test environments.

Sustainability — Energy & Power Technologies
CSCD DELIVERS GM UPSIDE.
MAINTAIN BUY. PT TO $15
Investment recommendation
We maintain our BUY rating on CSCD as we believe that
increasing complexity of new materials, tighter specifications and
the increasing cadence of next-generation node shrinks will
continue to drive high-end test and measurement solutions and
earnings leverage for the company.
Investment highlights
 Cascade reported in-line revenues with a beat on the bottom
line. Q3 guidance was below expectations but we expect a
good rebound in the Q4 period as the overall spending
environment rebounds.
 The strength in income this quarter was driven by record
gross margins in both engineering systems and production
probes.
 We expect that Cascade will continue to deliver margin
upside as the higher-margin production probes for RF test
grow as a percentage of sales. Some of this gross margin
benefit may be offset by higher R&D spend in the near-term
but the company’s 20% adjusted EBITDA model remains
intact.
 The company highlighted new partnerships and products in
the quarter, which help give us confidence in its leading
position in semiconductor engineering systems and RF production probes.

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