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On Wednesday, CLSA analysts downgraded Vanguard International Semi (5347:TT) from an "Outperform" rating to "Hold," adjusting the price target from TWD114.00 to TWD84.00. The downgrade follows the company’s first quarter results for 2025, which, according to CLSA analyst Jason Tsang, were slightly above expectations. Despite this, the company’s second quarter guidance is in line with CLSA’s predictions, but unfavorable foreign exchange (FX) movements are expected to negatively impact Vanguard’s financial performance.
Tsang noted that while the recovery in 8-inch wafer demand is progressing as anticipated, the benefits are likely to be overshadowed by the adverse effects of FX rate fluctuations. Consequently, CLSA has revised its earnings per share (EPS) forecasts downward by 12% and 16% for the years 2025 and 2026, respectively.
The revised price-to-book (PB) multiple, now set at 2.4x, reflects a more cautious valuation approach. This figure represents the midpoint between one standard deviation below and two standard deviations below the five-year average. The adjustment in the PB multiple is a significant factor in the lowered price target for Vanguard International Semi.
The report from CLSA suggests that while the fundamental aspects of Vanguard’s business, such as demand for mature nodes, are improving, the financial outlook is dampened by external economic factors. The impact of these factors has led to a more conservative stance on the stock’s future performance.
Investors in Vanguard International Semi will be watching closely as the company navigates the challenges posed by the FX market, alongside its operational advancements. The updated rating and price target from CLSA are indicators of the market’s current assessment of the semiconductor company’s prospects.
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