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On Wednesday, TD Cowen has adjusted its outlook on Silvaco Group Inc (NASDAQ:SVCO) shares, reducing the price target to $20.00 from the previous $23.00 while maintaining a Buy rating on the stock. The revised target follows a reported revenue delay and order halts that impacted the company's performance in the September 2024 quarter and its full-year 2024 projections.
The analyst from TD Cowen noted that an approximate $5 million delay in FTCO revenue to the December 2024 quarter, combined with halted orders from four of Silvaco's Chinese customers and a Taiwanese company, were primary factors in the company's missed targets for September 2024. These customers are involved in the automotive (System in Package, SiP) and power market sectors, specifically silicon carbide (SiC) and gallium nitride (GAN) Technology Computer-Aided Design (TCAD).
As a result of these developments, Silvaco's revised calendar year 2024 outlook reflects a $2 million decrease at the midpoint. Despite these short-term challenges, the long-term growth forecast for Silvaco remains unchanged, though starting from a slightly reduced base.
The analyst further adjusted the calendar year 2025 sales estimate to $72.5 million, a decrease from the previously projected $76.5 million. This adjustment is in line with the new price target of $20 for Silvaco's shares. The new target reflects the immediate financial revisions but also retains a positive outlook on the stock with the continuation of a Buy rating.
In other recent news, Silvaco Group, Inc. has revised its full year 2024 revenue forecast, with the company now expecting gross bookings to be between $64 million and $67 million and revenue estimates adjusted to $60 million to $63 million. This change comes after the company reported preliminary unaudited revenue results of approximately $11 million for the third quarter of 2024.
In the same vein, Silvaco is facing punitive damages from a recent jury verdict related to the ongoing Nangate Litigation, with the company, its chairperson, and a former board member ordered to pay a total of $33 million.
Furthermore, Silvaco has been ordered to pay $11.3 million in a legal dispute stemming from its 2018 acquisition of Nangate. Despite these legal challenges, the company continues to maintain a strong financial position, with an unaudited cash, cash equivalents, and marketable securities position of $102.3 million reported as of June 30, 2024.
Investment firms such as Craig-Hallum, Needham, and Rosenblatt Securities have maintained a positive outlook on Silvaco, with Craig-Hallum and Needham giving Silvaco a Buy rating and Rosenblatt setting a 12-month price target of $26.00. These are recent developments in the company's ongoing operations.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Silvaco Group Inc's financial situation, complementing TD Cowen's analysis. Despite the recent challenges, InvestingPro Tips highlight that Silvaco holds more cash than debt on its balance sheet, indicating a strong liquidity position. This financial stability could be crucial as the company navigates through the reported revenue delays and order halts.
Furthermore, InvestingPro data shows that Silvaco's revenue grew by 20.5% in the last twelve months, reaching $58.28 million. This growth, coupled with an impressive gross profit margin of 79.77%, suggests that the company's core business remains robust despite recent setbacks.
However, investors should note that the stock has experienced significant price declines, with a 43.37% drop over the last three months. This aligns with TD Cowen's reduced price target and reflects the market's reaction to the company's recent challenges.
For those seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Silvaco Group Inc, providing deeper insights into the company's financial health and market position.
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