Fannie Mae, Freddie Mac shares tumble after conservatorship comments
Investing.com -- Jefferies has downgraded Soitec (EPA:SOIT) to “hold” from “buy,” and reduced its price target to €50 from €58, citing ongoing uncertainty in cyclical recovery and a subdued structural growth profile, in a note dated Friday.
Shares of the French company were down 4% at 03:33 ET (07:33 GMT).
Analysts pointed to persistent RF-SOI and automotive wafer inventory corrections and diminished long-term revenue expectations.
Customer inventory levels for RF-SOI are projected to decline from 14 months at the end of 2024 to 11 months by the end of 2025.
However, Jefferies said it is unclear whether these levels will stabilize or continue falling into 2026.
The brokerage noted that a similar trend could play out in the automotive sector, where wafer inventory correction may persist despite signs of stabilization in the broader supply chain.
Structural growth has also weakened. Jefferies highlighted a reset in mobile RF content growth expectations, now forecast at 4–5%, down from 15%, driven by design changes in RF components.
The brokerage has removed all revenue contribution expectations from SmartSiC. In addition, iPhone-linked Imager-SOI revenue has declined with limited visibility into replacement sources.
Jefferies said that while growth continues in POI (Piezoelectric-on-Insulator), Photonics-SOI and IoT-related FD-SOI, those segments are not yet large enough to materially impact overall performance.
As a result, the firm projects a revenue CAGR of 4% between fiscal 2025 and fiscal 2028.
Revenue estimates for fiscal 2026 and 2027 were cut by 11% and 8%, respectively. Jefferies now expects a 10% revenue decline in fiscal 2026, leading to a 13% drop in EBIT.
The revised €50 price target is based on a CY26E price-to-earnings ratio of 23x and an EV-to-sales ratio of 2.2x. This reflects a 20% discount to Soitec’s five-year historical average valuation.
The brokerage increased the valuation multiple from 18x used previously, citing current earnings as being at a cyclical low.
Jefferies said the price target cut is driven solely by downward revisions in forecasts, not valuation methodology changes.
The analysts’ base case assumes RF-SOI inventory pressure continues through the end of 2025 and possibly into calendar 2026.
No material revenue is expected from SmartSiC. In the downside case, Soitec’s price could fall to €33 if inventory correction extends through fiscal 2026 and POI growth slows.
The upside case of €82 assumes quicker normalization in RF-SOI and automotive demand, coupled with earlier-than-expected adoption of co-packaged optics.