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On Friday, Citi analyst Daniel Schafei revised the price target for Siltronic AG (ETR:WAFGn) (WAF:GR) (OTC: SSLLF) shares, reducing it to €70.00 from the previous €85.00, while still recommending the stock as a Buy. The adjustment follows Siltronic’s fourth-quarter results for 2024, which met the preliminary expectations. The company achieved its forecasted sales and EBITDA (earnings before interest, taxes, depreciation, and amortization) margins for the year, despite a high-single-digit year-over-year decline in sales and maintaining EBITDA margins around 25%.
Siltronic has projected a stable sales environment for the calendar year 2025, with EBITDA margins expected to range between 22% and 27%. However, the company anticipates a high-single-digit decline in sales for the first half of 2025 compared to the second half of 2024, attributing this to delayed orders that are likely to be fulfilled in the second half of the year. Despite this, Citi predicts a more subdued second half than Siltronic’s expectation of approximately 15% half-over-half growth, estimating only a 5% increase.
The less optimistic outlook from Citi is due to persistent weaknesses in the logic/memory sectors, a sluggish power market, and slower-than-expected inventory reductions. These factors, combined with ramp costs, depreciation, and pricing pressures, have led Citi to reduce its EBITDA forecasts for Siltronic for the calendar years 2025 and 2026 by approximately 23% and 21% respectively, prompting the decrease in the price target.
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