5N Plus still has big upside, this analyst says

Ventum Capital Markets analyst Daniel Lavoie says a new U.S. government award strengthens 5N Plus’s (5N Plus Stock Quote, Chart, News, Analysts, Financials TSX:VNP) St. George, Utah semiconductor materials platform.

In a Sept. 3 update, Lavoie reiterated his “Buy” rating and $44.00 target on 5N Plus.

5N Plus has been selected to receive US$7.3-million in U.S. government funding to establish domestic production of gallium arsenide electro-optical components at its St. George facility.

Lavoie said the award follows a similar pattern to prior government support for 5N Plus’s germanium expansion, helping build strategically important domestic semiconductor capacity while reducing the company’s capital needs.

Lockheed Martin will be the initial customer, working with 5N Plus through product qualification before potential low-rate production and a follow-on production agreement.

Gallium arsenide, or GaAs, is a compound semiconductor used in defence, sensing, high-frequency electronics and space applications.

Under the project, 5N Plus plans to add GaAs compounding and crystal-growth equipment, along with related process controls and inspection capabilities.

“We view the award as another step in the evolution of St. George into a broader U.S. advanced-semiconductor materials hub,” Lavoie said.

The St. George facility already produces germanium substrates used in space-solar applications. Lavoie said adding GaAs expands the site further into the III-V semiconductor supply chain and makes it more strategic within the U.S. defence supply chain.

The analyst said there could be a longer-term connection to AZUR SPACE, 5N Plus’s German space-solar cell business, though the new Utah GaAs capacity should not be viewed as a direct input into AZUR’s current manufacturing process.

Still, Lavoie said the Utah capabilities could eventually support GaAs substrates and other advanced semiconductor materials for space applications, including space solar cells.

“With U.S. defence and space customers increasingly focused on secure domestic supply chains, we believe having these capabilities within one group could become an increasingly important competitive advantage,” he said.

Lavoie expects 5N Plus to generate Adjusted EBITDA of $109-million on revenue of $487-million in fiscal 2026, improving to Adjusted EBITDA of $136-million on revenue of $554-million in fiscal 2027.

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