On Tuesday, Vishay Intertechnology (NYSE:VSH) maintained its Buy rating and a price target of $25.00, as the company announced significant restructuring initiatives aimed at realigning its operations with its "Vishay 3.0" growth strategy. The actions outlined by the company include streamlining its Sales, General, and Administrative (SG&A) functions, which will result in severance for approximately 170 employees, or about 6% of Vishay's SG&A staff.
The restructuring plan also involves the closure of three manufacturing facilities located in China, Germany, and the United States by the fiscal year 2026. This move is expected to reduce the company's direct labor force by roughly 365 employees, which is around 2% of Vishay's total manufacturing workforce.
Additionally, Vishay is implementing various reductions across its manufacturing operations, including production transfers. These changes are anticipated to lead to severance for about 260 employees.
The firm believes these steps are integral to Vishay's ongoing transformation efforts, which focus on optimizing its manufacturing footprint and reallocating resources more efficiently.
The restructuring is designed to better position Vishay within its market and to support the implementation of its growth strategy. With these changes, the company aims to enhance its operational efficiency and to drive long-term growth.
The analyst from Stifel has reiterated confidence in the stock, maintaining the current price target and rating in light of these developments.
Vishay Intertechnology has announced a significant restructuring plan, which includes the closure of three manufacturing facilities and a workforce reduction. The company also reported steady Q2 2024 revenues of $741.2 million, with a gross margin of 22.0%. TD Cowen maintained a Hold rating on Vishay's shares but lowered the price target from $24.00 to $22.00, citing less than expected performance.
The company is also planning capacity expansion investments of $2.6 billion from 2023 to 2028, aiming to increase MOSFET capacity by 12% in 2025 and semiconductor products by 5.5% in 2024. Vishay has further expanded its IHPT series of haptic actuators, designed to enhance user experience in various automotive and commercial applications.
Lastly, the company has broadened its market presence by acquiring Ametherm, which is expected to boost its standing in the electric vehicle and battery management system markets.
InvestingPro Insights
In light of Vishay Intertechnology's (NYSE:VSH) recent restructuring announcements, investors may find additional context through InvestingPro data and tips. The company's market capitalization stands at $2.51 billion, with a P/E ratio of 14.85, reflecting its current earnings valuation. Despite a challenging environment indicated by a revenue decline of 11.76% over the last twelve months as of Q2 2024, Vishay maintains a strong liquidity position with liquid assets exceeding short-term obligations. This is a critical factor considering the costs associated with its restructuring plan.
InvestingPro Tips suggest that while analysts have revised their earnings expectations downwards for the upcoming period and anticipate a sales decline in the current year, Vishay has successfully maintained dividend payments for 11 consecutive years, showcasing its commitment to shareholder returns. Additionally, the company is trading near its 52-week low, which might present a buying opportunity for value investors, especially since analysts predict Vishay will remain profitable this year.
For investors seeking further insights, there are additional InvestingPro Tips available, offering a deeper analysis of Vishay's financial health and market position. These tips, along with detailed metrics, can be found at InvestingPro's dedicated page for Vishay Intertechnology: https://www.investing.com/pro/VSH.
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