On Thursday, TD Cowen maintained a Hold rating on shares of Vishay Intertechnology (NYSE:VSH) but lowered the price target from $24.00 to $22.00. The adjustment follows the company's recent earnings report and guidance, which fell short of expectations due to ongoing destocking in the automotive and industrial sectors.
Vishay Intertechnology, a manufacturer of discrete semiconductors and passive electronic components, is navigating through a period of soft demand and inventory adjustments. Despite these challenges, the company is progressing with its Vishay 3.0 strategy, which focuses on expanding capacity investments and enhancing sales channels.
The firm's bookings are showing signs of improvement, but the anticipated uplift in revenue and profitability has been postponed. This is attributed to the current market conditions marked by moderate demand and the continued need for inventory management.
TD Cowen's decision to maintain a Hold stance on Vishay Intertechnology is reflective of the current environment where the company's strategic efforts are yet to translate into significant financial performance improvements. The revised price target of $22.00 mirrors the cautious outlook due to the delayed revenue and profitability inflection point.
The analyst's remarks encapsulate the situation: "Print/guide missed expectations as Vishay saw continued destocking in auto/industrial. Management continues to execute towards its Vishay 3.0 plan of leaning into capacity investments and sales channels, with bookings slowly improving. That said, tepid demand and lingering inventory digestion is delaying the revenue/profitability inflection. We remain on the sidelines for now. Hold, PT to $22."
In other recent news, Vishay Intertechnology announced its Q2 2024 earnings, reporting revenues of $741.2 million, a figure that remains virtually unchanged from the previous quarter. This performance was impacted by reduced demand from the automotive and industrial sectors, but was somewhat offset by the acquisition of Newport and heightened demand in China and Taiwan for AI servers and consumer devices. As a result, the company's gross margin was recorded at 22.0%.
These recent developments include Vishay's strategic investments for capacity expansion, planned at $2.6 billion from 2023 to 2028. The company also aims to increase MOSFET capacity by 12% in 2025 and semiconductor products by 5.5% in 2024. Additionally, Vishay has broadened its market presence by acquiring Ametherm, which is expected to boost its standing in the electric vehicle and battery management system markets.
Looking ahead to Q3 2024, Vishay anticipates revenues to be between $725 million and $765 million, with a predicted gross margin of 21.0%. The company is also making progress with its expansion project in Turin, Italy, with commercial diode shipments anticipated soon. Analysts note that while the industry's recovery is taking longer than expected, Vishay's aggressive push in growth initiatives, particularly in e-mobility and sustainability sectors, bodes well for its future prospects.
InvestingPro Insights
As Vishay Intertechnology (NYSE:VSH) faces a challenging market environment, real-time data and insights from InvestingPro offer a more detailed perspective on the company's financial health and stock performance. According to InvestingPro data, Vishay Intertechnology's market capitalization stands at approximately $2.75 billion, reflecting the scale of the company within the semiconductor industry. Despite a revenue decline of 11.76% over the last twelve months as of Q2 2024, the company's gross profit margin remains at a healthy 24.68%, indicating a degree of resilience in its operational efficiency.
InvestingPro Tips suggest that the stock is currently in oversold territory, which could interest value-oriented investors looking for potential rebounds. Additionally, the company's ability to maintain dividend payments for 11 consecutive years, even amidst current challenges, signals a commitment to shareholder returns. On the liquidity front, Vishay's liquid assets surpass short-term obligations, providing some cushion against market volatility.
Investors should also note that while analysts predict a sales decline in the current year, they also expect Vishay to remain profitable, which is corroborated by the company's positive net income over the last twelve months. For those looking to delve deeper into Vishay's stock analysis, InvestingPro provides a comprehensive suite of metrics and additional tips, with a total of 10 InvestingPro Tips available for VSH at https://www.investing.com/pro/VSH.
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