Nvidia shares pop as analysts dismiss AI bubble concerns
Investing.com -- Soitec SA (EPA:SOIT) shares tumbled more than 27% on Thursday after the French semiconductor materials company reported fiscal second-quarter results that showed weaker performance in several divisions and a softer-than-expected outlook for the coming quarter.
Analysts at Morgan Stanley said that second-quarter revenue reached €139 million, a figure described as “in-line with guide at €139m and MSe/Street.”
The brokerage said softer mobile activity was offset by a stronger automotive division, while the Edge and Cloud unit recorded what the analysts referred to as “a one-off order.”
Photonics revenue rose significantly from a year earlier, while RF-SOI “remains weak” and POI was “down y/y,” a development the note said “was unexpected.”
Morgan Stanley said Soitec recorded an impairment in its SmartSiC operation “due to lower substrate prices.”
The analysts also said the quarter “weakens our thesis,” a reference included in the note’s summary assessment.
Profitability metrics came in stronger than projected. The research note said the gross margin was “surprisingly strong at 25% (MSe 16%),” adding that the result “seems the result of inventory build.”
The brokerage also said, “we suspect R&D benefitted from receipt of credits,” while EBITDA margin reached 31.1%. The document showed EBIT at a loss of €35 million and an EBIT margin of negative 15.3%.
Soitec expects third-quarter revenue to expand at a “mid-to-high single-digit sequentially” rate. Morgan Stanley compared the guidance with its own projections and those of the broader market, noting, “Well below MSe/Css at +32%/24%.”
The analysts also said, “Questions remain around the decision to build inventory with stated aim to improve WC and the lower than expected outlook.”
Fiscal second-quarter revenue fell 36.2% from a year earlier, while first-half revenue declined 32.5% year over year. EBITDA rose 118% from a year earlier, and gross profit increased 61%.
Morgan Stanley maintained an “equal-weight” rating on the stock. The analysts wrote, “We derive our €35 price target by applying a 30x multiple to our fiscal ’27 estimate, which sits above the 3 year average multiple of c.25x.”
The brokerage stated that this premium reflected expectations that Soitec would eventually return to growth, though the analysts also laid out risks including “further expectations misses,” “evidence of pricing headwinds,” and the possibility of photonics and POI “contributing less.”
Potential upside factors listed included “improving visibility into the supply chain” and continued expansion in RF-SOI and photonics.