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Investing.com - UBS downgraded Soitec (EPA:SOI) (OTC:SLOIF) from Buy to Neutral and drastically cut its price target to EUR26.00 from EUR80.00 following disappointing results from the semiconductor materials company.
The investment bank cited "growing indications of long-term fundamental risks around content growth and success of new products" as key factors behind the rating change, despite still anticipating a cyclical rebound in the sector.
UBS noted that Soitec is currently shipping well below end-market demand levels, particularly in Mobile and Automotive/Industrial segments, which are showing significant year-over-year revenue declines of 33% and 60% respectively in fiscal year 2026.
The bank expects this under-shipping situation to eventually lead to a cyclical recovery in fiscal year 2027, with UBS estimating group revenues will grow approximately 10% year-over-year during that period.
UBS also acknowledged Soitec’s ongoing cost-cutting initiatives and efforts to improve cash flow, including inventory reductions in the second half, describing these as "necessary short-term challenges" aimed at achieving a more streamlined balance sheet by fiscal year 2027.
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