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Soitec shares target raised by Bernstein SocGen on growth recovery outlook

EditorEmilio Ghigini
Published 06/07/2024, 06:08 AM

On Friday, Bernstein SocGen Group adjusted its financial outlook for Soitec (SOI:FP) (OTC: SLOIF) shares, a semiconductor materials manufacturer, by increasing the price target to EUR175.00 from the previous EUR165.00. The firm maintained an Outperform rating on the stock.

Soitec's management, during the analyst meeting following the release of the FY24 results, confirmed a challenging first half for FY25, anticipating a revenue decrease of around 15% year-over-year on a like-for-like basis. This is due to the expected continuation of inventory reductions by foundries in the RF-SOI segment.

Soitec has indicated that the inventory reduction should conclude by September, setting the stage for a significant recovery in revenue growth during the second half of FY25.

Bernstein SocGen Group anticipates a revenue increase of 12% in the latter half of the year, which would align FY25 revenues with FY24's like-for-like figures, consistent with the company's guidance.

The semiconductor industry has been experiencing adjustments due to inventory management, impacting companies like Soitec. The firm's forecast for a revenue contraction in the near term reflects the broader market challenges. However, the expected normalization of inventory levels by September is a positive indicator for the latter half of FY25.

Soitec's management has outlined a path to recovery following the inventory adjustments. The firm's analysis suggests that once the excess inventory is cleared, Soitec is poised for a rebound in sales, aligning with their strategic projections for the fiscal year.

Investors and industry watchers will be monitoring Soitec's performance closely as the company navigates through the current inventory cycle, with the anticipation of a return to growth in the second half of FY25 as a critical milestone.

The revised price target from Bernstein SocGen Group reflects confidence in Soitec's ability to emerge from the current industry-wide challenges and capitalize on the expected market recovery.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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