inTEST Stock Continues to Rally Following Record Q3

inTEST Stock Continues to Rally Following Record Q3

INTT Stock Could Still Double

inTEST Corporation (NASDAQ:INTT) had an excellent 2021, with its share price rallying by an impressive 178% during the first half and closing out the year up 96%.

In 2022, with decades-high inflation, unprecedented interest rate hikes, fears of a looming recession, and the war in Ukraine wiping out investor optimism, inTEST stock’s momentum hasn’t continued.

Despite all these economic headwinds, inTEST Corporation has had a stellar year in terms of its business.

In March, the company reported tremendous fourth-quarter and full-year 2021 results and said it expected to report record 2022 revenues in excess of $100.0 million.

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inTEST Corporation has been true to its word. Its first-quarter 2022 revenue increased 23% year-over-year, and it had a record quarter-end backlog of $35.0 million. Its second-quarter revenue jumped by 36% to a record $29.6 million. Its third-quarter revenue went up by 16% to a record $30.8 million.

inTEST Corporation’s outlook for the remainder of 2022 is bullish. Management has said it expects the company’s revenue to come in at the high end of its guidance range of $110.0 to $115.0 million.

Investors haven’t exactly rewarded INTT stock for the company’s wonderful financial results. Before inTEST Corporation reported its third-quarter results in early November, inTEST stock was actually down by 45% year-to-date and 37% year-over-year.

Since the company reported its record third-quarter results, investors have started to wake up to inTEST Corporation’s long-term growth potential. INTT stock is still down by 13% year-to-date and almost 30% year-over-year, but it’s also up by 34% over the last month and 48% over the last six months.

Despite its outsized gains, inTEST stock still has plenty of room to run. Analysts have provided a 12-month share-price forecast for inTEST Corporation of $18.00 to $20.00. This points to potential gains in the range of 61% to 78%.

Wall Street is, of course, notoriously conservative. If the stock market bottoms in 2023 and investor optimism keeps increasing, INTT stock could rally to $24.50 within 12 months. That would represent a 120% gain from its current level.

Chart courtesy of StockCharts.com

inTEST Corporation Overview

inTEST supplies testing products to a wide range of markets, including aerospace, automotive, defense, industry, medical, semiconductor, and telecommunications. (Source: “Investor Presentation: November 2022,” inTEST Corporation, last accessed December 9, 2022.)

The company operates through two segments: Thermal Products and Electromechanical Semiconductor Products.

inTEST Corporation’s Thermal Products segment designs, manufactures, and sells thermal testing and processing products, ultra-cold storage solutions, digital streaming solutions, and image-capturing solutions.

Its Electromechanical Semiconductor Products segment designs, manufactures, and sells semiconductor testing products and robotics-based electronic production testing equipment.

inTEST Corporation’s blue-chip customer base includes Texas Instruments Incorporated (NASDAQ:TXN), Lockheed Martin Corp (NYSE:LMT), Raytheon Technologies Corp (NYSE:RTX), and Qualcomm Inc (NASDAQ:QCOM).

In 2021, inTEST Corporation launched a five-point strategy and successfully began growing its business, diversifying its markets, expanding its customer base, and adding new talent to its team. Also that year, inTEST acquired Z-Sciences Corp. (now North Sciences), Videology Imaging Solutions Inc, and Acculogic, Inc.

Record Q3 Revenue, Net Income, & Backlog

For the third quarter ended September 30, inTEST announced that its revenue increased by 46% year-over-year to $30.8 million. This represents the company’s second consecutive quarter of record revenue growth. (Source: “inTEST Reports Record Revenue of $30.8 Million and 16% Year-over-Year Growth in Net Income for Third Quarter 2022,” inTEST Corporation, November 4, 2022.)

In the third quarter, the company’s organic revenue went up by 23% year-over-year to $26.0 million. Meanwhile, acquisitions added $4.8 million to its revenue.

inTEST Corporation reported record third-quarter 2022 net income of $2.5 million, or $0.23 per share. That’s a 16% increase over its third-quarter 2021 net income of $2.1 million, or $0.20 per share.

The company also reported its second consecutive quarter of record backlog at the end of the third quarter: $47.9 million.

Nick Grant, inTEST Corporation’s president and CEO, commented, “We are gaining new customers, finding new applications for our solutions and continually innovating to drive growth.” (Source: Ibid.)

He added, “Importantly, our acquisitions and organic businesses are driving continued growth in our target markets with strong demand for our highly engineered solutions in defense, security, electric vehicles (‘EV’) and life sciences.”

Analyst Take

Except for its undervalued share price, there’s not much to dislike about inTEST Corporation.

The company has been reporting record revenues, earnings, and backlog. Moreover, inTEST expects to report full-year revenue at the high end of its guidance. And there’s no reason to think the company’s momentum will stop in 2023.

Therefore, inTEST stock’s current beaten-down share price provides investors with an attractive entry point.