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Investing.com -- Bank of America Securities slashed price targets on several analog and automotive semiconductor stocks, citing a weaker-than-expected recovery path amid a volatile macro backdrop.
The bank lowered its targets on Texas Instruments to $208 from $218, Onsemi to $52 from $56, and Allegro Microsystems to $38 from $45, pointing to slower demand recovery and rising competition.
Analysts said recent earnings and management commentary highlighted that expectations heading into the quarter were “too optimistic,” with what initially looked like a strong upturn now appearing closer to seasonal.
“A lumpy recovery path for analog semi vendors” is being complicated by tariff uncertainties and intensified competition in China, analysts led by Vivek Arya said in a note.
BofA cut its auto semiconductor market estimates for 2025–2027 by up to 2.2%, projecting $50 billion in sales next year, down 7% year-on-year.
The cautious stance follows Infineon’s warnings of “uncertain auto demand, specifically in China, along with weaker pricing due to competition,” as well as BYD’s decision to lower its 2025 sales target by about 16% to 4.6 million units.
Industrial chip forecasts were also revised lower for 2026 and 2027, though BofA slightly raised its 2025 estimate to $45.9 billion. U.S. ISM PMIs remained in contraction for a sixth straight quarter in August at 48.7, signaling softness in the broader industrial market despite bright spots in automation, aerospace and defense.
At the same time, post-earnings consensus estimates across major diversified vendors actually rose slightly — up about 1% for 2025–27 — with Onsemi the only exception where forecasts declined. Analysts said this suggests some near-term stability even as the broader recovery remains uneven.
Still, some companies delivered pockets of resilience. Texas Instruments said four out of five of its markets are in recovery mode, excluding auto, while Analog Devices pointed to “a strong, above-seasonal, reacceleration in Industrial sales.”
Microchip also reported better-than-expected August bookings.
Even so, BofA’s tactical preference is shifting toward names with better free cash flow visibility such as Analog Devices and Microchip, or those trading at lower relative multiples like NXP.
For the revised names, the new price objectives remain within historical ranges, but the bank believes that the near-term slope of recovery will likely remain gradual.