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Investing.com -- Deutsche Bank (ETR:DBKGn) has upgraded Melexis (EBR:MLXS) to Buy, marking its first positive rating on the Belgian semiconductor firm since initiating coverage in 2021. The move comes after the stock lost nearly half its value from over €100 in 2023.
Shares in Melexis jumped more than 7%.
Deutsche Bank cited improved visibility in Melexis’ core automotive segment, which accounts for around 88% of its revenue, and growing traction in the Chinese electric vehicle (EV) market as key drivers behind the shift in stance.
While the bank acknowledged ongoing uncertainties related to tariffs and near-term demand, it believes the worst of the inventory correction across auto semiconductors is behind the sector.
“This follows a huge swathe of downgrades led by the inevitable, inventory correction across auto semis in 2024,” analysts wrote.
“With that process largely complete, we believe that it is a good time to look forward to the recovery for magnetic sensor players in 2026,” they added, despite potential headwinds in the second half of 2025.
Deutsche Bank also noted that fears of a sharp decline in mature internal combustion engine (ICE) sales outside of China have eased, providing further support for the revised outlook.
At the end of last month, Melexis reported a sharp decline in first-quarter earnings, with net profit falling by half compared to the same period last year.
The semiconductor maker posted revenue of €198.2 million for the first three months of 2025, representing an 18% year-on-year drop. However, revenue was flat compared to the final quarter of 2024 and remained in line with the company’s expectations for its core automotive segment.
Net profit came in at €24.6 million, down significantly from a year earlier.
Commenting on the performance, CEO Marc Biron pointed to ongoing challenges in the sector. “Sales in the first quarter are in line with expectations,” he said, attributing the results to “volatile market conditions.”
Despite recent weakness in the U.S. dollar, Melexis maintained its forecast for the first half of the year and continues to project revenue of €400 million