On Monday, CFRA adjusted its outlook on Infineon (OTC:IFNNY) Technologies AG (IFX:GR) (OTC: IFNNY), reducing the price target from €41.00 to €34.00 while sustaining a Buy rating on the stock. The revised target is set at 14.5 times the firm's FY 25 (September) earnings per share (EPS) estimate, aligning with the company's peers and marking a decrease from Infineon's five-year average of approximately 18 times.
The firm also revised its EPS forecasts, cutting the FY 24 estimate by EUR0.07 to €1.89 and the FY 25 estimate by €0.20 to €2.35, while introducing an FY 26 projection of €2.74. This comes after Infineon reported June-quarter sales of EUR3.70 billion, a 9% decline year-over-year, and EPS of EUR0.43, down 37% from the previous year, which were in line with consensus expectations.
Despite the downward revision, Infineon's performance was deemed respectable given the less than 1% reduction in its FY 24 sales guidance amidst a challenging environment for the auto and industrial sectors, as reported by peers. The automotive segment, accounting for 57% of Q2 sales, saw a 2% quarter-over-quarter growth but a 1% year-over-year decline. Meanwhile, the Power and Sensor Systems division, representing 20% of sales, grew by 5% quarter-over-quarter, though it experienced an 18% year-over-year drop.
The company's emerging artificial intelligence (AI) power business is reportedly exceeding expectations, with sales anticipated to double in FY 25 to more than EUR400 million. This positive outlook is supported by the growing demand for data center power. Additionally, Infineon's silicon carbide revenue forecast for FY 24 remains unchanged at EUR600 million, and its expansion plans in Kulim are progressing as planned.
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