On Monday, Rosenblatt adjusted its outlook on Navitas Semiconductor (NASDAQ:NVTS) shares, reducing the price target to $10 from the previous $12, while maintaining a Buy rating on the stock.
The firm's decision follows Navitas' first-quarter results, which aligned with consensus expectations, showcasing a year-over-year revenue increase of 73%.
The company's management emphasized the addition of multiple new designs across various end markets and regions, which are projected to bring in an estimated $1.6 billion in revenue, up from $1.2 billion as of December.
Despite the positive developments in design wins, Navitas faces near-term challenges due to broader economic conditions. The company's revenue guidance for June is set at $20 million, impacted by headwinds particularly in the Solar and Industrial markets. This trend is not unique to Navitas but is consistent with its peers in the sector.
Rosenblatt has adjusted its estimates to reflect a slower adoption rate for GaN (Gallium Nitride) and SiC (Silicon Carbide) products, which are part of Navitas' offerings. The revised 12-month target price is now based on 9 times the company's next twelve months (NTM) sales.
Navitas' management has not only reported growth in revenue but also an increase in the estimated revenue generation from new designs, indicating an expansion of the company's market reach. The updated figure of $1.6 billion represents a significant rise from the $1.2 billion reported in December.
The price target adjustment reflects Rosenblatt's response to the current economic environment and its impact on the semiconductor industry, particularly affecting the adoption rates of specific technologies like GaN and SiC. Despite the reduced price target, the firm continues to see the value in Navitas with a sustained Buy rating.
InvestingPro Insights
In light of Rosenblatt's recent analysis of Navitas Semiconductor (NASDAQ:NVTS), InvestingPro data provides additional context to the company's financial health and market performance. Notably, Navitas has demonstrated impressive revenue growth, with the last twelve months as of Q1 2024 showing a 100.34% increase, bringing in $89.27 million USD. This aligns with the company's reported year-over-year revenue increase and the management's emphasis on the addition of new designs.
However, the company is grappling with profitability challenges. The P/E ratio stands at a negative -8.16, and the company was not profitable over the last twelve months. This is consistent with Rosenblatt's concerns regarding slower adoption rates for Navitas' products. Additionally, the stock has experienced significant volatility, with a price total return of -35.53% over the last three months, which may be a point of consideration for investors.
InvestingPro Tips suggest that Navitas holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations, which could be indicative of a solid financial position to weather near-term market headwinds. However, with 2 analysts having revised their earnings downwards for the upcoming period and the stock price's recent hit, investors should be mindful of the potential risks. For those looking to delve deeper into Navitas' financials and gain more insights, there are over 10 additional InvestingPro Tips available. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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