Shares of Amkor Technology Inc. rose sharply Tuesday after the company raised its fourth-quarter guidance, citing higher higher-than-expected demand for its semiconductor assembly and testing services.
Amkor expects revenue to grow 6 percent from the third quarter. It previously forecast fourth-quarter revenue to range within 2 percent of the third quarter. Given Amkor's third-quarter sales of $616.2 million, its new forecast implies revenue of $653.2 million.
The company expects gross margin to be around 26 percent for the quarter, above its previous forecast for margins of 23 percent to 25 percent.
Deutsche Bank analyst Peter Kim kept a "Hold" rating on Amkor but raised his share price target to $6.50 from $5.50.
"We believe that this reflects an overall stronger recovery in semiconductor sales and possibly corrects an overly cautious outlook ... in the previous quarter," the analyst wrote in a note to investors.
Kim said Amkor's third-quarter results were hurt by lower-than-expected demand for chips used in video game consoles such as the Xbox 360 and the PlayStation 3. Amkor's increase to its gross margin guidance could mean a recovery in this area.
Shares of Amkor rose 89 cents, or 14 percent, to $7.40 in afternoon trading. In the past 52 weeks, the stock has traded between $1.60 and $7.70.