Aehr Test Systems Stock Hits Record High on Strong EV Demand

AEHR Stock Up 65% Since Start of 2023

Shares of Aehr Test Systems (NASDAQ:AEHR) recently ripped to a record high, building on the gains they made since the company reported another quarter of great financial results on January 5.

Aehr Test Systems stock finished calendar year 2022 down by 18%, but it had also rallied by 200% since July of that year. That momentum carried into 2023 after the company announced that its revenues in its fiscal second quarter (ended November 30, 2022) jumped on the strength of its sales of semiconductor testing and burn-in equipment for the electric vehicle (EV) industry. Its net income also massively jumped during its fiscal second quarter.

Aehr Test Systems’ upward financial trajectory is expected to continue, especially since the company has a large order backlog.

For its fiscal year 2022, Aehr has reiterated its previous guidance that its total revenue will be in the range of $60.0 to $70.0 million (up from $16.6 million in fiscal 2021). The company also forecasts that its profit margins in fiscal 2022 will be high, similar to its profit margins in fiscal 2021.

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Moreover, the company continues to expect that its bookings will grow faster than its revenues in fiscal 2023 as the demand for silicon carbide in EVs increases exponentially.

It’s no wonder that investors have been bullish on AEHR stock lately. As of this writing, Aehr Test Systems stock is up by:

• 57% over the last month
• 188% over the last six months
• 65% year-to-date
• 180% year-over-year

Chances are good that AEHR stock will experience some well-deserved, short-term profit-taking. Aehr Test Systems stock is currently trading up by 22% over its 50-day simple moving average and 115% over its 200-day simple moving average.

Chart courtesy of StockCharts.com

About Aehr Test Systems

Aehr Test Systems has been a leader in the semiconductor burn-in and testing solutions industry for more than 40 years.

The company designs, engineers, manufactures, and sells testing systems for burning-in semiconductor devices in wafer-level, singulated-die, and package-part form. (Source: “Aehr Reports 54% Revenue Growth Year Over Year in Second Quarter of Fiscal 2023,” Aehr Test Systems, January 5, 2023.)

Its systems are used in the automotive, mobile, photonics, silicon carbide, and silicon memory and logic industries. (Source: “Investor Presentation,” Aehr Test Systems, last accessed January 30, 2023.)

The company has installed more than 2,500 systems worldwide.

Aehr Test Systems’ customers include Lumentun Holdings Inc (NASDAQ:LITE), Seagate Technology Holdings PLC (NASDAQ:STX), Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), Texas Instruments Incorporated (NYSE:TXN), and the U.S. Department of Defense.

Long-term market drivers for the $9.0-billion semiconductor testing market include the rapid global adoption of EVs, as well as the increased demand for automotive integrated circuits, silicon photonics, smartphones, and tablets.

$25-Million Order to Support EVs

On January 22, Aehr announced that it had received a $25.4-million follow-on order from its lead silicon carbide testing and burn-in customer for a significant number of “FOX-XP” wafer-level testing and burn-in systems for the production of silicon carbide devices for EVs. (Source: “Aehr Receives $25.1 Million Order for FOX-XP Test and Burn-in Systems,” Aehr Test Systems, January 22, 2023.)

The client is a leading Fortune 500 semiconductor device supplier that has a significant customer base in the automotive market.

Aehr Test Systems expects to ship the FOX-XP systems in its fiscal 2023 fourth quarter (beginning March 1) through its fiscal 2024 second quarter (ending November 30, 2023).

Fiscal Q2 Revenues Up 54%; Earnings Up 416%

For the second quarter of its fiscal 2023, which ended November 30, 2022, Aehr announced that its revenue increased by 54% year-over-year to $14.8 million. (Source: Aehr Test Systems, January 5, 2023, op. cit.)

The company’s net income in the quarter was $3.7 million, or $0.13 per share, up from $717,000, or $0.03 per share, in the same period of the previous year. That’s an increase of 416%.

Aehr Test Systems’ adjusted earnings, which exclude the impact of stock-based compensation, in the second quarter of fiscal 2023 were $4.5 million, or $0.16 per share. That’s compared to adjusted earnings of $1.4 million, or $0.05 per share, in the second quarter of fiscal 2022.

Aehr closed the second fiscal quarter with bookings of $10.8 million and an order backlog of $15.5 million.

Gayn Erickson, Aehr Test Systems’ president and CEO, commented, “We had a very solid quarter, reflecting strong sequential and year-over-year growth in revenue and net income, both ahead of consensus estimates.” (Source: Ibid.)

“Our momentum in silicon carbide wafer level burn-in continues to grow. We see this momentum continuing for the next several years as companies are adding significant capacity in silicon carbide semiconductors to address the incredible forecasted demand, particularly for the electric vehicle and electric vehicle charger markets.”

Analyst Take

Aehr Test Systems seems to be doing everything right. The company achieved record financial results in its fiscal 2022. Then its revenue surged by 89% in the first quarter of fiscal 2023 and 54% in the second quarter.

Management expects to continue reporting wonderful results as the demand for silicon carbide in EVs increases exponentially throughout the decade.

This means AEHR stock could be on the way up.