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On Friday, UBS began coverage on Indie Semiconductor Inc (NASDAQ: INDI), issuing a Neutral rating and setting a price target at $4.50. The firm's analysis points to a modest 4% upside potential for the stock. According to InvestingPro data, the company, currently valued at $880 million, shows signs of being slightly undervalued based on its Fair Value analysis. Indie Semiconductor, a company specializing in automotive semiconductors, is currently transitioning its focus from infotainment, which is projected to account for 65% of its 2024 estimated revenue, to advanced driver assistance systems (ADAS), expected to make up 66% of its 2025 estimated revenue.
Indie Semiconductor's stock experienced a significant decline of 44% in 2024, attributed to cyclical challenges in the automotive sector that rendered the company's original financial forecasts unachievable. With a beta of 1.4 and notably weak gross profit margins of -31.8%, the company faces significant headwinds. UBS anticipates that the near-term performance of Indie Semiconductor will be influenced by cyclical trends within the automotive industry, seasonal weakness in the first quarter, and uncertain macroeconomic conditions. InvestingPro subscribers have access to 7 additional key insights about INDI's financial health and market position.
The firm also predicts that the next round of financial revisions for Indie Semiconductor may be negative, with UBS's estimate for 2025 revenue growth at 34%, which is below the consensus estimate of 39%. Despite current challenges, the company maintains strong liquidity with a current ratio of 2.39 and achieved 23% revenue growth in the last twelve months. UBS suggests that investors remain on the sidelines until the company's long-term revenue growth outlook, driven by its ADAS technology, becomes more certain. Indie Semiconductor is expected to start shipping a key corner radar sensor in the fourth quarter of 2025, with significant ramp-up anticipated in 2026.
In other recent news, indie Semiconductor has made substantial financial strides. The company reported third-quarter revenue of $54 million, marking a 3.1% sequential growth and surpassing its previous guidance. The non-GAAP gross profit was $27.2 million, resulting in a gross margin of 50.4%. However, indie Semiconductor also recorded a non-GAAP operating loss of $16.8 million and a net loss of $17.7 million.
Looking forward, indie Semiconductor anticipates a robust fourth quarter with revenue estimates between $56 million and $60 million, indicating over 7% sequential growth. The company's strategic backlog has grown to $7.1 billion, with Advanced Driver Assistance Systems (ADAS) constituting over 72% of the backlog.
Regarding other recent developments, indie Semiconductor has launched a $175 million notes offering. The proceeds from this offering will be used to pay for capped call transactions, with the remaining funds allocated for working capital and general corporate purposes. The company has also secured recent design wins with major Original Equipment Manufacturers (OEMs) such as Porsche and General Motors (NYSE:GM).
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