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Investing.com - Citi downgraded Soitec (EPA:SOIT) (EPA:SOI) from Neutral to Sell on Tuesday, while reducing its price target to EUR40.00 from EUR58.00, citing persistent weakness in the company’s core business segments.
The downgrade reflects concerns about Soitec’s mobile and automotive divisions, which represent over 75% of the company’s business and continue to face pressure from weak end markets and elevated inventory levels of approximately 14 months in calendar year 2024.
Citi projects fiscal years 2026 and 2027 will likely be inventory digestion years as the company works to bring inventories back to pre-Covid levels of between 6-9 months, while noting Soitec’s smartphone growth forecasts of +2%/+4% for CY25/CY26 appear more optimistic than Citi’s estimates of 0%/+2%.
The bank has lowered its revenue projections for Soitec by 18% and 17% for FY26/27, positioning its estimates 10%/8% below consensus, while also cutting EPS estimates by 57%/56% for the same periods.
Additional concerns include delays in Soitec’s SmartSiC product ramp and execution challenges for the company’s Edge & Cloud AI initiatives, with Citi warning of limited visibility due to short lead times and the risk of further earnings disappointments in upcoming quarters.
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