Strong Q2 order intake despite lowered forecast By Investing.com

Investing.com – The German semiconductor equipment supplier Aixtron SE (ETR:) reported robust order intake for the second quarter. However, the company has revised its annual forecast downwards, which Jefferies welcomes and remains optimistic about the stock.

In the second quarter of 2024, Aixtron’s order intake amounted to €176 million, which was 19% above the consensus estimates of €148 million. The strong order intake was mainly driven by demand for silicon carbide (SiC) products, which accounted for 58% of the total order intake. Jefferies analysts Olivia Honychurch and Janardan Menon emphasized that the increase in orders dispels market fears about declining SiC demand and potential loss of market share for Aixtron.

Aixtron lowered its revenue forecast for the 2024 fiscal year from €630-720 million to €620-660 million, with a constant gross margin of 43-45%. The EBIT margin was also adjusted and now stands at 22-25% compared to the previous 24-26%. Jefferies had expected revenue of €680 million, while the consensus was at €661 million. Despite these reductions, Jefferies views the adjustment of the forecasts positively and believes it removes significant uncertainty for investors.

“We expect Aixtron’s reduction of the FY24 forecast to act as a positive catalyst for the stock, as this step was widely expected and even hoped for,” the analysts said. They added, “We believe this helps dispel concerns that demand for SiC is currently significantly declining and that Aixtron is losing market share.”

The management’s comments also indicate a continued strong order intake in the coming quarters, positioning Aixtron well for growth in the 2025 fiscal year, according to Jefferies. The experts also point out that the company recently acquired a major customer, which is believed by the investment bank to be Infineon (OTC:) (ETR: IFXGn), which is expected to significantly contribute to future order intake.

Preliminary revenue in the second quarter of 2024 amounted to €132 million, slightly below the consensus estimate of €134 million and Jefferies’ forecast of €135 million. EBIT of €13 million was significantly below the consensus of €26 million and Jefferies’ expectation of €28.7 million.

The stock of Aixtron SE, rated “Buy” by Jefferies, recently rose by nearly 16% to €21.83. Jefferies’ price target is €40, representing a potential return of 83%.

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