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Investing.com -- J.P. Morgan has initiated coverage on Aixtron SE with a “neutral” rating, setting a price target of €13.40 for December 2026.
Shares of the European technology company were down 5% at 08:08 ET (10:08 GMT).
The brokerage cited slower recovery in Aixtron’s core markets and increased competition as reasons for near-term caution, even as the firm maintains a more supportive medium-term view.
Aixtron , which specializes in semiconductor deposition equipment for compound semiconductors such as Silicon Carbide (SiC) and Gallium Nitride (GaN), experienced strong growth between 2020 and 2024 amid surging demand from the electrification and power management sectors.
J.P. Morgan analysts noted that the company expanded its operating and capital base in anticipation of continued expansion. However, the market has since softened as customers absorb prior overcapacity.
The report projects a revenue decline of 15% in FY25 to €538 million, followed by a modest recovery to €565 million in FY26 and €669 million in FY27.
EBIT is forecast to fall to €91 million in 2025, recovering to €107 million in 2026 and €145 million in 2027, with the EBIT margin expected to move from 17% in 2025 to 18.9% in 2026 and 21.7% in 2027.
J.P. Morgan’s EBIT forecasts are 11-13% below Bloomberg consensus for 2025-26, reflecting expectations of lower operating leverage and weaker mix effects on margins.
J.P. Morgan identified key headwinds including reduced capital spending from semiconductor manufacturers following the 2020-2024 expansion cycle, pricing pressure in SiC wafers and integrated circuits, and intensifying competition from Western and Chinese equipment makers.
The brokerage noted that Aixtron’s 2023 gross margin of over 43% was exceptional and unlikely to be repeated, as it was supported by high utilization rates and favorable product mix.
The analysts placed Aixtron on Negative Catalyst Watch due to near-term risks tied to weaker second-half 2025 performance and the forthcoming 2026 guidance.
J.P. Morgan expects Aixtron’s operating base expansion, such as higher headcount and depreciation from new facilities, to limit earnings leverage over the next two years.
Despite near-term caution, the report highlighted that Aixtron’s financial position remains solid, with expectations for improved free cash flow as inventory levels unwind by 2026-27.
The analysts anticipate the company could consider share buybacks once its cash balance exceeds €250 million.
J.P. Morgan’s valuation uses a 8.5x EV/EBIT multiple applied to 2027 estimates, aligning with sector peers and the company’s historical range.