Benzinga | Sep 8, 2020 01:25PM EDT

Needham Downgrades ACM Research On SMIC Blacklisting, STAR Valuation Uncertainties

ACM Research Inc (NASDAQ:ACMR) has material exposure to SMIC and a potential SMIC blacklisting could weaken its business outlook, according to Needham & Company.

The ACM Research Analyst: Quinn Bolton downgraded ACM Research from Buy to Hold.

The ACM Research Thesis: The impact of an SMIC blacklisting could be greater on ACM Research than many of its US peers, since the company's exposure to SMIC is "likely to be more prominent as a China-based supplier," Bolton said in the note.

He estimated SMIC to contribute significantly more than 10% of ACM Research's revenues in 2020 and 2021.

"The continued sell-off of semiconductor and semiconductor-related stocks listed on the STAR Market is eroding valuation support for ACM Shanghai's pending Star Market IPO that has been seen as the primary near-term upside driver for the parent company (ACMR) listed on NASDAQ," the analyst wrote.

He expects the recent deterioration of US-China relations to "deal dual blows to the stock."

ACMR Price Action: Shares of ACM Research had plummeted by 23.50% to $62.78 at the time of publication Tuesday.