Photronics, Inc. (PLAB): A Bull Case Theory

We came across a bullish thesis on Photronics, Inc. on Beeli Capital’s Substack by Andrew Beeli. In this article, we will summarize the bulls’ thesis on PLAB. Photronics, Inc.'s share was trading at $35.28 as of January 29th. PLAB’s trailing P/E was 15.77 according to Yahoo Finance.

Photronics, Inc., together with its subsidiaries, engages in the manufacture and sale of photomask products and services in the United States and internationally. PLAB delivered a strong quarter, highlighted by adjusted EPS of $0.60 versus $0.45 expected and revenue of $216 million versus $205 million estimates, while GAAP EPS reached $1.07 due to a deferred tax valuation allowance reversal and FX gains. Management further boosted confidence by guiding next quarter’s revenue to $221 million, well above the $207 million consensus.

The most notable development was the sharp increase in 2026 capital expenditure guidance to $330 million, compared to ~$190 million in 2025 spending. With PLAB generating 20%+ ROIC for four consecutive years, this step-up in investment signals management’s conviction that capacity expansion will translate into meaningful growth in revenue, EPS, and free cash flow over the next several years. Operational commentary reinforced this view as management emphasized PLAB’s U.S. market leadership, strengthening position in higher-end nodes, and growing engagement with long-term, high-value customers.

The U.S. was also the only geography to post positive year-over-year growth, outperforming the broader IC segment by more than 1,200 basis points. Competitive context also came into focus with the recent listing of Tekscend Photomask, whose similar revenue base and IC-heavy mix offers helpful valuation support for PLAB following its sharp rally.

Yet PLAB’s status as the only U.S.-headquartered producer of trusted masks, operating the only commercial high-end trusted mask facility in the country, suggests the company should command a geopolitical premium. While the medium-term outlook through 2026–2028 appears strong and valuation remains reasonable, the recent price appreciation has outpaced fundamentals, prompting a prudent reduction in position size.

Previously we covered a bullish thesis on Photronics, Inc. (PLAB) by Virtual_Seaweed7130 in April 2025, which highlighted the company’s undervaluation, strong semiconductor demand tailwinds, and strategic U.S. positioning. The company's stock price has appreciated by approximately 99.66% since our coverage. This is because the thesis played out as industry growth accelerated. The thesis still stands as secular demand remains intact. Andrew Beeli shares a similar view but emphasizes PLAB’s accelerating fundamentals.

Photronics, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held PLAB at the end of the third quarter which was 25 in the previous quarter. While we acknowledge the potential of PLAB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.