SkyWater Technology (SKYT) Stock Forecast & Price Target

SkyWater Technology Inc. demonstrates a positive outlook due to robust year-over-year revenue growth driven by project expansions and increased tool revenue, projected to reach up to $10 million in Q4 2023. The company is benefiting from a surge in customer-funded capital expenditures, particularly in the aerospace and defense sector, which now constitutes over 50% of its revenue, while also gaining traction in other high-growth verticals like biomedical and advanced computing. Additionally, management's expectation for operating expenses to remain stable and their confidence in surpassing a long-term revenue growth model of 25% further underscores the potential for strong free cash flow generation and continued investment in the business.

SkyWater Technology Inc. is experiencing a significant decline in wafer services revenue, which is projected to fall to less than $10 million, reflecting a year-over-year decrease of at least 50% for 2024. Margins have also suffered, with gross margins decreasing to 17.4% and a notable shift in earnings expectations leading to lower multiples compared to peers. Additionally, the company's reliance on a single production facility raises concerns among customers regarding the stability of operations, compounded by underperformance in key verticals such as automotive and industrial sectors in a challenging macroeconomic environment.