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On Thursday, UBS analysts adjusted their stance on SUESS MicroTec SE (SMHN:GR), upgrading the stock rating from Sell to Neutral, while also raising the price target to EUR 40.00 from EUR 35.80. The revision reflects a reassessment of the company’s financial outlook and market position.
The UBS analyst cited several factors influencing the decision, including an anticipated revenue decline of 13% by 2026 and an expected EBIT margin of 15%. The analysis pointed to a weakening industry backdrop, particularly noting a decrease in demand for High Bandwidth (NASDAQ:BAND) Memory (HBM) tools as the market digests capacity builds from 2024 and faces potential oversupply.
Additionally, the demand for photomask tools is expected to normalize, with the transition to Gate-All-Around (GAA) technology and a reduction in demand from China contributing to this change. The competitive landscape is also intensifying, with Chinese firms SMEE and Kingsemi poised to challenge SUESS MicroTec’s sales in China.
Despite these challenges, UBS believes that the risks are now adequately reflected in the company’s current valuation. SUESS MicroTec’s shares are trading at approximately 12 times price-to-earnings (PE), which is a decrease from the historical average of 18 times PE. This adjustment in trading multiples has been a key consideration in the analyst’s upgraded rating.
The new price target of EUR 40.00 represents an upward revision and suggests that UBS sees limited upside potential for the stock from its previous target. This adjustment provides investors with a revised benchmark for the company’s stock performance in the near term.
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