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On Thursday, Berenberg analysts adjusted their stance on Siltronic AG (ETR:WAFGn) (WAF:GR) (OTC: SSLLF), downgrading the stock from a Buy to a Hold rating. Accompanying this change, the firm significantly reduced the price target for the semiconductor company from EUR104.00 to EUR47.00. The reassessment follows the preliminary results for Q4 2024 released by Siltronic on February 4, which indicated the company navigated a difficult year but did not achieve the expected return to growth.
Analysts at Berenberg highlighted that while Siltronic managed the challenges of 2024 commendably, the anticipated growth rebound has not materialized, and the outlook for 2025 remains fraught with difficulties. Consequently, they have adjusted their expectations, pushing the projection of a business momentum increase further into the future. This recalibration of Siltronic’s performance outlook has prompted the revision of both the stock rating and the price target.
The downgrade reflects several factors impacting Siltronic’s market, including mixed demand dynamics. Despite strong demand for AI chips, softer shipments in the smartphone and PC sectors, which respectively account for approximately 22% and 14% of wafer demand, have led to unusually high wafer inventory levels at Siltronic’s customers. These conditions are further exacerbated by a sluggish global manufacturing environment.
Looking ahead to 2025, forecasts by global market intelligence firm IDC suggest a modest growth outlook for Siltronic’s key markets. IDC predicts that smartphone shipments will increase at a rate below the 6.4% year-over-year growth seen in 2024, and PC shipments are expected to rise at a mere 4.3% pace, compared to a growth of around 1% year-over-year in 2024. Additionally, Manufacturing Purchasing Managers’ Index (PMI) readings from Europe, China, and the United States corroborate this tempered expectation for wafer demand in the coming year.
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