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Investing.com - Craig-Hallum downgraded Navitas Semiconductor (NASDAQ:NVTS) from Buy to Hold on Tuesday, while setting a price target of $6.00. The stock, which has shown remarkable strength with a 156% surge over the past six months, currently trades at $6.70.
The downgrade follows what the research firm described as "poor 3Q sales guidance" driven by multiple factors including tariff issues affecting silicon carbide products in the Chinese electric vehicle market, reduced focus on low-end mobile markets primarily in China, and cuts to solar tax credits. According to InvestingPro data, analysts anticipate a 25% revenue decline for the current fiscal year, with the company maintaining a strong balance sheet featuring more cash than debt.
Craig-Hallum noted that aggressive pricing, particularly from competitor Innoscience, likely influenced Navitas’ decision to shift away from lower-end markets. Despite hopes that new lower-cost manufacturing from Powerchip would help offset these challenges, the firm believes these pressures are becoming too significant.
The research firm expressed agreement with Navitas’ strategy to focus on higher-margin markets but cautioned that implementation would take several quarters, predicting "flattish sales/GM trends for the next few quarters" before new catalysts emerge.
Craig-Hallum also highlighted concerns about Navitas’ valuation, noting the stock trades at approximately 28 times calendar 2026 EV/S, "far above any peer," with additional concerns about dilution and significant insider sales suggesting retail investor enthusiasm disconnected from fundamentals.
In other recent news, Navitas Semiconductor has reported its second-quarter 2025 earnings, showing a larger-than-expected loss with an EPS of -$0.25 compared to the forecasted -$0.05. However, the company’s revenues slightly exceeded expectations, coming in at $14.49 million against a $14.36 million forecast. Despite the earnings miss, the company’s stock price showed a positive reaction in aftermarket trading. Additionally, Needham has raised its price target for Navitas Semiconductor to $8.00 from $3.00, maintaining a Buy rating on the stock. This adjustment comes even though Navitas provided guidance below Street estimates. Needham anticipates near-term estimates to be reduced as Navitas reconfigures its Mobile business and deals with tariff uncertainties. These developments highlight the ongoing challenges and adjustments facing Navitas Semiconductor.
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