On Wednesday, Soitec (SOI:FP) (OTC: SLOIF) stock, received an upgrade from "Underweight" to "Neutral" by an analyst at JPMorgan, with a new price target set at €110.00, up from the previous €95.00.
The adjustment comes as the analyst observes a normalization of wireless inventory and an uptick in smartphone demand compared to the previous year and early this year.
The company, having experienced a revenue decline in FY24 and projecting flat growth for FY25, is expected to maintain its FY25 guidance in the upcoming full-year results announcement tomorrow.
The analyst anticipates that Soitec may also revise or postpone its FY27 revenue guidance of $2.1 billion, which is approximately double the FY25 guidance. This potential adjustment aligns with concerns previously highlighted by JPMorgan.
The revised price target of €110 is based on an average forward P/E valuation of 17.5 times, which has been the average since the second half of 2022.
The analyst's outlook suggests that while the worst may be over for Soitec, becoming overly optimistic based on expectations of smartphone re-stocking is premature, especially given that volume growth for the market-leading iPhone remains subdued.
The iPhone's higher RF content is beneficial for Soitec, but increased confidence in the stock would require more significant traction with top-tier customers for its Smart SiC product.
JPMorgan's stance reflects a cautious optimism, acknowledging improvements in the market while also recognizing that further evidence of growth, particularly in Soitec's advanced product offerings, is needed to adopt a more bullish position on the stock.
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