On Friday, Rosenblatt Securities adjusted its outlook for Navitas Semiconductor (NASDAQ: NVTS) shares, reducing the price target to $10 from the previous $12 while maintaining a Buy rating on the stock.
The adjustment follows the company's first-quarter earnings, which met consensus expectations and saw a 73% year-over-year increase in revenue.
Navitas Semiconductor's management pointed to a significant expansion in their design pipeline across various markets and regions, now estimated to potentially generate $1.6 billion in revenue, a notable increase from the $1.2 billion projected in December.
Despite these positive developments, the company has set its revenue guidance for June at $20 million, influenced by current macroeconomic conditions.
The firm's revised outlook is a response to the slower-than-expected adoption of Gallium Nitride (GaN) and Silicon Carbide (SiC) products, which Navitas specializes in.
These headwinds are particularly evident in the Solar and Industrial markets, a trend that Rosenblatt notes is consistent with the experiences of Navitas' competitors in the sector.
The new price target of $10 is based on a 9x multiple of the company's next twelve months (NTM) sales figures. This strategic recalibration of expectations by Rosenblatt reflects a cautious approach due to the immediate challenges facing Navitas Semiconductor, while still affirming the stock's potential with a Buy rating.
InvestingPro Insights
As Navitas Semiconductor navigates the market with its innovative GaN and SiC products, the real-time data from InvestingPro offers a deeper look into the company's financial health and stock performance. With a market capitalization of $858.56 million, Navitas holds a promising position in the semiconductor industry. Notably, the company's liquid assets surpass short-term obligations, indicating a robust balance sheet that could mitigate risks in volatile market conditions.
InvestingPro Tips suggest that while analysts do not expect Navitas to be profitable this year, they do anticipate sales growth. This aligns with the company's reported expansion in their design pipeline and the recent 73% year-over-year revenue increase. However, it's important to note that the stock has experienced significant volatility, with a price drop of 30% over the last three months, which may concern some investors.
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