Why Aehr Test Systems Stock Jumped 18% on Wednesday
Key Points
Aehr Test Systems received a follow-on order for a fully loaded FOX-XP wafer burn-in system from a major silicon photonics customer.
This is at least the sixth full-system order Aehr has announced since mid-February.
Shares now trade at 81 times trailing sales, a valuation that prices in enormous amounts of future growth.
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Shares of Aehr Test Systems (NASDAQ: AEHR) soared 17.8% higher in Wednesday's early trading. The maker of semiconductor test and burn-in equipment cooled down from that dramatic spike, but was still up by 8.8% around 2:30 p.m. ET. The company announced a repeat order for automated wafer burn-in systems from a satisfied customer.
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A mystery customer strikes again
The order involves a fully loaded FOX-XP burn-in system, which can test up to nine silicon wafers at a time. The system is fully loaded with add-ons, including an automated alignment tool and other extras. Delivery is scheduled within six months.
Aehr keeps its customer relationships as quiet as possible. All I know about this client is that it's a leading maker of networking products and a top supplier of fiber-optic transceivers to the data center networking sector. Several companies fit the description, even when you limit the search to very large hyperscaler companies.
The company didn't disclose the dollar amount of this contract, either. However, the order is part of a larger relationship with at least one earlier system shipment and "a forecast for additional systems this calendar year."
One order in a growing pile
Beyond this particular mega-customer, Aehr has signed a lot of contracts recently. Judging by the company's press releases alone, this is at least the sixth full-system order since the middle of February.
That may not sound like a lot, but each order accounts for multi-million dollar revenue boosts and Aehr recorded just $45 million of total sales last year. These juicy orders make a big difference.
And each announcement brings another blast of rocket fuel under Aehr's stock price. At this point, the stock has soared 937% over the last 52 weeks, and shares are trading at a lofty 81x trailing sales. It would still be expensive if revenues suddenly multiplied tenfold and share prices stayed the same.
It's exciting stuff, but a bit too hot for me. I don't mind watching Aehr Test Systems from the sidelines.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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