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On Monday, Deutsche Bank (ETR:DBKGn) analyst Robert Sanders upgraded the rating for Melexis (EBR:MLXS) NV (MELE:BB) (OTC:MLXSF) from Hold to Buy, while also raising the price target from EUR 50.00 to EUR 70.00. Sanders noted that despite previous reservations due to the significant drop in the company’s stock price from just above EUR 100 in 2023 to just above EUR 50 today, the current outlook warranted a reassessment.
Sanders acknowledged that while Melexis had been under a Hold rating as the stock value halved and had not been rated a Buy since coverage began in 2021, the situation appears to be changing. This change in perspective comes despite the ongoing uncertainties surrounding tariffs. The analyst highlighted Melexis’ success in the rapidly expanding Chinese electric vehicle market and reduced concerns about the impact of a decline in mature internal combustion engine vehicles outside of China.
The upgrade follows a series of downgrades across the automotive semiconductor industry in 2024, driven by an inevitable inventory correction. However, with this process largely completed, as indicated by the situation at Allegro (WA:ALEP), a peer company, Sanders believes it is now an opportune time to anticipate a recovery for magnetic sensor manufacturers like Melexis, looking ahead to 2026.
Despite potential risks for the second half of 2025 sales due to possible pull-ins, the outlook for Melexis is positive according to Deutsche Bank’s analysis. Sanders’ commentary reflects a belief that the worst of the market’s challenges may be over, and Melexis is positioned to benefit from the next phase of growth in the automotive semiconductor sector.
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