Stryker shares tumble despite strong Q2 results and raised guidance
Investing.com -- HSBC Global Research has upgraded BE Semiconductor Industries (AS:BESI) to a "hold" rating, following a reset in expectations and a sharp drop in the company’s stock price, down over 25% year-to-date.
The upgrade reflects a more balanced risk-reward profile, with limited downside to the target price of €95.
HSBC has reduced its revenue forecast for BESI in 2025 by 8.5%, reflecting weaker-than-expected performance in the first quarter and a soft outlook for the second quarter.
As a result, the operating income estimate for 2025 has been lowered by 14.3%, with 2025 EPS expectations revised down by 16%.
The 2026 forecasts have also been trimmed slightly, with revenue down 1.5% and operating income down 1.1%.
While BESI continues to see growth in hybrid bonding and AI-related applications, concerns remain about the size of the total addressable market for hybrid bonding tools.
Although orders have been received from major memory producers and foundries, the broader demand picture for these tools may fall short of the company’s expectations.
That said, consensus estimates have already been substantially reduced since HSBC’s initial "reduce" rating in September 2024, which has helped mitigate downside risk.
For the second quarter of 2025, BESI’s guidance points to flat revenue of €144.1 million, below market expectations.
Analysts expect this weak guidance to further lower consensus estimates for 2025 and 2026, bringing them closer to HSBC’s revised forecasts. This adjustment is likely to reduce the downside risks to the stock moving forward.
HSBC maintains its target price of €95, based on a 2026 price-to-earnings multiple of 27.3x, in line with BESI’s five-year average.
The target price reflects the current risk-reward balance, with the downside potential now limited.
Analysts believe that buy-side expectations are likely to align more closely with their own, which are below Visible Alpha consensus.
In its bear case, HSBC sees a fair value of €44, assuming slower recovery in demand and lower profitability.
The bull case scenario, which assumes faster demand recovery and stronger growth, results in a fair value of €162.
However, HSBC continues to believe that the hybrid bonding market may not meet BESI’s more optimistic expectations.