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Investing.com -- ams OSRAM AG (SIX:AMS) stock surged more than 21% on Tuesday after the company posted fourth-quarter results that exceeded analyst expectations.
The Austria-based semiconductor and lighting technology firm reported revenue and earnings that largely aligned with forecasts, while providing an outlook that suggested improving conditions in 2025.
Analysts at Barclays (LON:BARC) noted that the company is seeing signs of stability in key segments despite ongoing challenges in the broader market.
The company reported fourth-quarter revenue that was 2% above consensus estimates, with its semiconductor division performing in line with expectations.
The lamps and systems segment, however, outperformed, posting revenue 8% ahead of forecasts. While gross margins came in slightly below expectations, earnings before interest, taxes, depreciation, and amortization exceeded consensus by 4%.
The company continues to make progress on its cost-reduction efforts, with savings of €110 million achieved in 2024, tracking ahead of its €225 million target for the end of 2026.
AMS (VIE:AMS2) also reported a reduction in its OSRAM-related liabilities, which fell to €585 million from €604 million in the prior quarter.
Meanwhile, non-core revenue of €200 million generated in 2024 has now been fully phased out, allowing the core business to show a 7% year-over-year growth.
AMS’s first-quarter 2025 revenue forecast of €750 million to €850 million beat expectations by roughly 3% at the midpoint. Their projected EBITDA margin of 14.5% to 17.5% is slightly below the 17.1% consensus estimate.
While demand for automotive semiconductor products remains muted, AMS noted that the weakness is not as severe as seen by some of its peers.
The company also pointed to early signs of stabilization in the industrial and medical segments, though demand remains subdued. Meanwhile, sales of semiconductor products for consumer handheld devices are expected to follow a typical seasonal decline.
AMS forecasts stronger growth in the second half of 2025, with low double-digit growth over the first half, fueled by new smartphone, automotive lighting, and industrial laser products.
They also expect improved profitability from cost-cutting, targeting an 18.3% EBITDA margin for 2025, up from 16.8% in 2024.
Capital expenditures are projected below 8% of sales (compared to the roughly 10% consensus), and free cash flow is expected to surpass €100 million due to lower capital expenditures and continued working capital inflows.
While AMS flagged positive momentum, they remained silent on the potential sale or transfer of their Malaysian microLED facility, a point of interest for some investors.
Barclays analysts flagged the strong first-quarter 2025 book-to-bill ratio, positive free cash flow, and cost discipline as drivers of the stock’s recent surge.
AMS reaffirmed its mid-term targets: 6-10% annual growth for its core semiconductor business, flat or slightly declining performance for its lamps and systems division, and a 20-24% EBITDA margin by 2027, with capital expenditures around 8% of sales.