On Monday, Soitec (EPA:SOIT) (SOI:FP) (OTC: SLOIF) shares, a semiconductor materials company, received a rating downgrade from BofA Securities. The firm shifted its stance from Buy to Neutral and reduced the price target to €98.00 from the previous €130.00. The revised price target is based on a 7.5x FY26 enterprise value/EBITDA (EV/EBITDA) multiple, a decrease from the prior 11x FY25 EV/EBITDA multiple.
The downgrade comes as BofA Securities adjusts its outlook on Soitec's financial projections, citing concerns that expectations for fiscal year 2027 might be overly optimistic. The reassessment has led to a reduction in revenue forecasts by 5-6% for FY26-27E, particularly in the Smart Devices and Auto/Industrial segments. These changes are expected to result in an 8-10% decrease in the company's projected EBITDA for the same period.
Despite the downgrade, BofA Securities acknowledged Soitec's achievements in gaining market share within the radio frequency (RF) filter sector. The company's Piezoelectric-on-Insulator (POI) technology has been selected by 10 customers, with another 10 in the process of qualification. Soitec also appears to have a strong position in the Silicon Photonics market.
However, BofA Securities anticipates that Soitec's diversification efforts into SmartSiC, a silicon carbide (SiC) solution, may take longer than initially expected. This outlook is further affected by the ongoing decline in SiC wafer prices, which could potentially impact the company's market valuation multiple.
In summary, while Soitec has made notable progress in certain areas of its business, BofA Securities has revised its expectations and valuation of the company, leading to a lowered price target and a neutral rating.
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