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On Tuesday, Bernstein SocGen Group has revised its price target for Disco (OTC:DSCSY) Corp. (6146:JP) (OTC: DSCSY), a global semiconductor manufacturing company. The new price target is set at JPY40,300.00, a reduction from the previous target of JPY55,200.00. Despite this decrease, Bernstein maintains an Outperform rating on the company’s shares. According to InvestingPro data, Disco maintains strong financial health with a current ratio of 2.62 and holds more cash than debt on its balance sheet.
The adjustment comes as analyst David Dai forecasts a flattening in Disco’s revenue for the fiscal year ending March 26, 2026, due to slower-than-expected capacity build-out for High Bandwidth (NASDAQ:BAND) Memory (HBM) and Silicon Carbide (SiC). However, Dai anticipates a revenue growth acceleration to 16% in the following fiscal year. This optimism is based on the potential upside from Apple (NASDAQ:AAPL)’s Chip on Wafer (CoW), NAND Stacking, and Backside Power technologies. The company has demonstrated strong historical performance, with a five-year revenue CAGR of 16% and impressive gross margins of 70%.
According to Dai, Bernstein’s current model conservatively estimates that these three technologies combined will contribute 15% to Disco’s revenue. Even in a bear case scenario, where AI revenue declines significantly with a 50% drop in HBM and a 70% reduction in CoWoS for the fiscal year ending March 27, 2027, Disco’s revenue is still expected to grow by 8%.
The analyst points out that while Disco’s near-term weaknesses are already recognized by the market, the potential new drivers for next year’s growth have not been extensively discussed. The price target has been established using a 30x P/E ratio, and Bernstein reiterates its Outperform rating, signaling confidence in the company’s future performance despite the near-term challenges.
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