On Monday, UBS revised its price target for Aspeed Technology Inc (5274:TT), a company listed on the Taiwan Stock Exchange, reducing it to NT$3,800 from the previous NT$4,300. This adjustment comes with a maintained Neutral rating on the stock. The revision was prompted by concerns over a potential slowdown in the shipment of Baseboard Management Controllers (BMC) into 2025.
Aspeed Technology held an analyst meeting on December 20th, where they provided a conservative guidance for their first-quarter sales, projecting a 10% quarter-over-quarter decline to NT$1.7-1.8 billion. This forecast aligns with UBS’s prior estimates. The firm is closely monitoring the possibility of a continued moderation in BMC demand into the second quarter of 2025, particularly in light of potential issues with Nvidia (NASDAQ:NVDA)’s GB200 servers’ ramp-up.
The company’s gross margin (GM) for 2024 has been slightly affected due to a write-off associated with Emulex, a brand under Broadcom (NASDAQ:AVGO) Inc. However, Aspeed anticipates that the impact of this write-off will diminish by the end of the year, leading to an improved gross margin as the company moves into 2025. For the first quarter of 2025, Aspeed has guided a gross margin range of 63.5% to 65.0%, compared to the gross margin guidance of 64.0% to 65.5% provided for the fourth quarter of 2024.
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