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Tuesday, on Wall Street, Jefferies analyst team adjusted their outlook on Navitas Semiconductor (NASDAQ: NVTS), lowering the price target to $2.50 from the previous $3.00, while continuing to recommend a Hold position on the stock. Currently trading at $2.89, the stock has declined over 13% in the past week, according to InvestingPro data. The analysts noted that end market demand has experienced further weakening, but they anticipate the first quarter to represent the cyclical bottom for the company.
Navitas Semiconductor has been grappling with an excess of inventory across its electric vehicle, solar, and industrial segments. Despite maintaining a healthy gross margin of 40.6%, this surplus has affected the company’s performance and led to a product mix shift towards Mobile. The data center sector showed additional growth following a robust second half of 2024, yet it remains a comparatively minor part of the business. The company maintains strong financial health with a current ratio of 5.59 and minimal debt-to-equity of 0.02.
In response to the ongoing challenges, Navitas Semiconductor has taken measures to reduce its breakeven point to approximately $39 million per quarter, assuming a gross margin of 40%. However, Jefferies analysts expressed skepticism about the company’s ability to reach this target swiftly, even with a potential sharp recovery in the second half of the year. Consequently, the firm has decided to maintain a cautious stance on the stock. For deeper insights into NVTS’s valuation and growth potential, including 8 additional key ProTips, visit InvestingPro.
In other recent news, Navitas Semiconductor disclosed its Q4 2024 earnings, reporting an EPS of -$0.06, which met market expectations. However, the company fell short on its revenue forecast, reporting $18 million against the anticipated $23.99 million. Despite achieving a full-year revenue growth of 5% to $83.3 million, the revenue miss in the fourth quarter was significant, leading to market concerns. Navitas maintains a strong financial position with $87 million in cash and no debt, which provides some stability despite increased operating expenses. Looking ahead, the company expects Q1 2025 revenue to be between $13 million and $15 million, with a recovery anticipated in Q2. In terms of strategic developments, Navitas has completed $450 million in design wins, particularly in the data center and mobile markets, which are expected to drive future growth. Additionally, the company has made significant strides in the EV sector, announcing a GaN design win with China’s third-largest EV player. These developments come amid a challenging semiconductor market, with Navitas targeting positive EBITDA by 2026.
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