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Investing.com -- Bernstein has raised its price target on Ibiden Co. Ltd. to ¥16,500 from ¥9,080, citing accelerating margin expansion from artificial intelligence (AI) demand and improving profitability in its semiconductor substrate business.
The firm’s analyst, David Dai, reiterated an Outperform rating, calling Ibiden “one of the biggest beneficiaries of AI in the Japan semiconductors.”
“We believe Ibiden’s electronics margin can expand from ~20% to high 20%, with higher AI contribution and improvement with Intel margin,” Dai wrote.
The firm estimates Ibiden’s margin with Nvidia at about 40% before depreciation, though it expects a temporary dip due to costs associated with the company’s Ono fab.
“Meanwhile, Intel’s margin is improving with higher contribution from server and high-end products such as EMIB-T,” it said.
Bernstein now forecasts Ibiden’s electronics margin at 20% this year, up from 14% in the prior year, and expects it to rise to 26% over the next few years.
Nvidia will remain “the biggest growth driver,” according to Bernstein, but the company is also “starting to expand the customer base and attract new networking and ASIC customers.”
A fourth customer is expected to contribute high single-digit electronics revenue in the current quarter, with further growth from AMD’s AI GPU and AI ASIC products expected over the next two years.
Bernstein raised its FY27/3 and FY28/3 earnings forecasts to ¥479 and ¥624, respectively, 19% and 24% above consensus.
The firm added, “As Ibiden’s EPS may grow at 43% CAGR over FY26/3–FY28/3, our target multiple implies 0.7 PEG, which does not look demanding to us.”