Cohu Q4 Loss Widens

Cohu reported Q4 revenue of $122.2 million, up 30% year-over-year from $94.1 million, with recurring revenue rising about 25% and test cell utilization improving to an estimated 76% in December. The company posted a GAAP net loss of $22.5 million ($0.48/share) and an adjusted loss of $7.2 million ($0.15/share), roughly in line with prior-year adjusted results, and highlighted design-win momentum across automotive ADAS, power devices, computing AI and HBM inspection metrology. Management guided Q1 2026 sales to $122 million ± $7 million, signaling stability in near-term revenue while profitability remains a work in progress.

Analysis

Market structure: Cohu (COHU) is a beneficiary of a recovering semiconductor test cycle—Q4 revenue +30% YoY and test-cell utilization at 76% in Dec signal demand is rising but still below peak (mid-80s+ historically). Winners include test-equipment and service-oriented vendors (COHU, Teradyne TER) and OSATs that see more tester run-time; losers are low-end commoditized test suppliers and captive in-house test where utilization stays weak. Modest macro upside should tighten used-equipment markets and support spare/service pricing, with limited direct impact to FX/commodities; stronger cyclicals could steepen curves and widen high-yield spreads modestly as capex-led growth re-rates credit curves.

Risk assessment: Key tail risks are a sharper-than-expected AI/autonomous slowdown, a major customer pull-in/push-out of capex, or export controls disrupting supply chains—each could cut implied demand by 20–40% within 6–12 months. Near-term (days) price moves will track guidance cadence; short-term (weeks–months) depends on Q1 execution and design-win conversions; long-term (2–3 years) hinges on AI/HBM and automotive ADAS adoption rates. Hidden dependencies include customer concentration, backlog quality, and installed-base ageing that underpins recurring spares revenue. Catalysts: customer capex announcements, detailed Q1 call metrics (utilization, backlog convert), and semi capex reports (SEMI) over next 60–120 days.

Trade implications: Tactical long exposure to COHU sized 2–3% of portfolio is warranted while cellular utilization trends improve; prefer limited-risk options to control downside. Consider a relative-value pair: long COHU (3%) / short TER (1.5%) to isolate test-equipment share gains vs. broader automation exposure. Use 3–6 month call spreads on COHU (buy 0–15% ITM / sell 25–40% OTM depending on pricing) to capture upside if utilization >80% by June; allocate 0.5–1% premium. Rotate 1–2% from consumer electronics hardware into semicap/service names over next 3 months.

Contrarian angles: Consensus may underappreciate the durability of recurring service/spare revenue (up 25% YoY) which provides margin resilience even if new capital spending lags; conversely, the market could be overrating design-win rhetoric absent conversion timelines. Past semi cycles (2016–18) show utilization inflection points can be short-lived—watch conversion to paid orders. Unintended consequence: faster installed-base growth raises aftermarket warranty and R&D spend, pressuring near-term adjusted margins despite top-line expansion.

Key Decisions for Investors

• Establish a 2–3% long position in COHU (Cohu, Inc.) within 5 trading days; add a second tranche to reach 4% if reported test-cell utilization re-crosses 80% on a trailing 3-month average or if Q1 revenue prints above $129M (high end of guided range).
• Implement a relative-value pair: long COHU 3% / short TER (Teradyne) 1.5% to isolate test-equipment share gains; exit the short leg if TER outperforms COHU by >15% in 30 days or buy-to-close if COHU underperforms TER by 10% from entry.
• Buy a 3–6 month COHU call spread sized to 0.5–1% of portfolio: buy 0–15% ITM call and sell a 25–40% OTM call (depending on implied vol) to cap premium; target 2x payoff if COHU rallies >25% and close if IV rises >40% or if COHU falls >20% from purchase.
• If COHU quarterly revenue prints below $115M (below guided range low) or recurring revenue growth decelerates QoQ, reduce exposure in semicap/service names by 1–2% and rotate into defensive industrials/healthcare over the next 30–90 days.