Aixtron SE Surpasses Q2 Order Expectations Despite Downgraded Annual Forecast: Why Jefferies Remains Bullish
Investing.com – Renowned German semiconductor equipment supplier, Aixtron SE (ETR:), reported a substantial order intake for Q2 2024, exceeding consensus estimates. However, the company revised its annual forecast downward, a move that Jefferies analysts welcomed, maintaining their optimism about the stock.
Key Insights from Aixtron's Q2 Performance:
- Impressive Order Intake:
- Aixtron’s Q2 2024 order intake hit €176 million, surpassing the consensus estimate of €148 million by 19%.
- Silicon carbide (SiC) products drove the majority of this demand, contributing to 58% of the total.
- Revised Annual Forecast:
- The company adjusted its 2024 revenue forecast from €630-720 million to €620-660 million, maintaining a gross margin of 43-45%.
- EBIT margin projections were also revised to 22-25%, down from the previous 24-26%.
- Jefferies had anticipated revenues of €680 million, against a consensus of €661 million. Despite these adjustments, Jefferies views this as reducing significant investor uncertainty.
- Positive Market Reaction:
- Jefferies analysts Olivia Honychurch and Janardan Menon believe the forecast reduction will act as a positive catalyst for the stock, alleviating concerns about SiC demand and Aixtron's market share.
- Future Prospects:
- Aixtron’s management hinted at continued strong order intake in the coming quarters, positioning the company favorably for growth in 2025.
- The company recently secured a major customer, speculated to be Infineon (OTC: IFXGn), expected to significantly bolster future orders.
- Q2 Financials:
- Preliminary Q2 revenue was €132 million, slightly below the consensus of €134 million and Jefferies' forecast of €135 million.
- EBIT for Q2 stood at €13 million, considerably lower than the consensus of €26 million and Jefferies' expectation of €28.7 million.
- Stock Performance:
- Aixtron SE’s stock, rated “Buy” by Jefferies, recently surged nearly 16% to €21.83. Jefferies has set a price target of €40, indicating a potential return of 83%.
What This Means for Investors
Simplified Breakdown:
- Aixtron SE’s stock, rated “Buy” by Jefferies, recently surged nearly 16% to €21.83. Jefferies has set a price target of €40, indicating a potential return of 83%.
- Strong Orders: Aixtron received more orders than expected in Q2, mainly for their silicon carbide products, which are crucial for efficient semiconductor manufacturing.
- Revenue Forecast Adjustments: While Aixtron lowered its expected revenue for the year, this move was anticipated and is seen as a way to manage investor expectations better.
- Market Confidence: Analysts believe this adjustment will boost investor confidence, as it addresses concerns about potential declines in product demand.
- Future Growth: The company is poised for growth in the next fiscal year, partly due to acquiring a significant customer likely to drive future orders.
- Stock Value: Despite lower-than-expected earnings for the quarter, Aixtron's stock is performing well, with a bullish outlook from financial analysts.
Impact on Your Finances:
- Investment Opportunity: Aixtron’s strong market position and future growth potential make it a compelling buy, especially given the current stock price and potential returns.
- Market Stability: The revised forecasts might initially sound negative, but they actually provide a more realistic and stable outlook, reducing market volatility.
- Long-Term Gains: Investing in Aixtron now could yield substantial returns as the company continues to grow and secure more orders.
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By understanding the nuances of Aixtron's recent performance and future potential, even the most novice investor can navigate the financial landscape with confidence.