Barclays downgrades Besi to “equal weight” on valuation, outlook risks

Investing.com -- Barclays (LON:BARC) has downgraded BE Semiconductor Industries (AS:BESI) to “equal weight” from “overweight,” citing stretched valuation, limited near-term growth visibility, and rising investor expectations that may not be backed by fundamentals. 

The brokerage maintains its price target at €125, stating the stock is now in line with this level, leaving little room for upside.

The downgrade follows strong share price performance in recent weeks, particularly after Besi’s capital markets day. 

While the event helped elevate sentiment, Barclays believes expectations have become elevated despite little change in the company’s underlying trajectory. 

Analysts noted that optimism around growth in 2H25 and into 2026 appears overly ambitious, especially as consensus forecasts model about 40% revenue growth next year, a level Barclays finds difficult to underwrite.

Besi disclosed that it received €20 million in TCB (thermocompression bonding) orders during the quarter. While the order suggests customer interest in its tools, Barclays believes these may be tied to pilot-line activity and not indicative of a broader acceleration. 

The brokerage said ongoing caution around the adoption of hybrid bonding in high-bandwidth memory (HBM), pointing to limited traction in the near term.

Barclays expects conditions in Besi’s mainstream business to remain challenging and sees no material shift in trends for the remainder of 2025. 

For Q2, the brokerage models €154 million in total orders, up from €132 million in the prior quarter, and revenue of €149 million, a modest 3% quarter-on-quarter increase. 

Gross margin is expected to decline slightly to 63%, with adjusted operating profit projected at €49 million, representing a 33% margin. Adjusted net income is forecast at €46 million, with diluted EPS of €0.56.

Barclays forecasts 154 million euros in revenue and 51 million euros in operating profit for 3Q25, with a gross margin of 63%.

For full-year 2025, the bank maintains its revenue forecast at €604 million, down slightly from €608 million in 2024. 

Gross profit is expected at €382 million, reflecting a 63% margin, while operating profit is seen falling to €191 million, with a margin of 32%. Adjusted EPS is forecast at €2.16.

Despite acknowledging long-term potential in advanced packaging, Barclays sees limited catalysts over the next 12 months and remains skeptical that Besi can outperform under current market conditions. 

The brokerage is waiting for meaningful order traction or signs of a mainstream recovery before becoming more constructive.