On Wednesday, BofA Securities adjusted its stance on Vanguard International Semi (5347:TT), moving its rating from Buy to Neutral. The firm also set a new price target for the stock at NT$115.00. The revision reflects a shift to a more balanced risk/reward outlook for the semiconductor company.
The downgrade comes with a cautious near-term view from BofA Securities, highlighting concerns about the company's fourth-quarter performance. Analysts at the firm predict a 15% quarter-over-quarter revenue decline for the final quarter of 2024, a stark contrast to the consensus projection of a 5% increase. This anticipated drop is attributed to weakening demand for consumer-related products.
Consequently, BofA Securities has also revised its earnings estimates for Vanguard International Semi for the years 2024 and 2025, lowering them by 11-12%. This adjustment takes into account the anticipated near-term challenges the company may face.
Despite the near-term risks, BofA Securities acknowledges the long-term potential for Vanguard International Semi. The firm anticipates structural benefits arising from order transfers away from Chinese foundries. Additionally, a substantial revenue increase is expected from the company's 12-inch business operations, which could contribute positively to its performance in the longer run.
The new price target of NT$115.00 reflects these mixed expectations, balancing the potential headwinds in the near term with the prospective long-term advantages for Vanguard International Semi. The company's stock will continue to be monitored by investors as market conditions evolve and its strategic moves unfold.
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