Dollar rebounds despite Fed independence worries; euro slips
Investing.com -- Jefferies has raised earnings estimates and price targets for key European semiconductor firms following stronger-than-expected second-quarter order trends in the industrial and automotive segments.
The note dated Thursday, flags demand recovery, particularly in China, prompting upgrades for STMicroelectronics (EPA:STMPA) (STM), Infineon (OTC:IFNNY) Technologies (ETR:IFXGn), ams OSRAM (SIX:AMS), and Melexis .
The industrial chip segment is leading the cyclical recovery, with double-digit quarter-over-quarter order growth in China, aided by inventory depletion and targeted subsidies.
STM, with substantial exposure to industrial microcontrollers and analog products, is expected to outperform.
Jefferies forecasts STM’s revenue to rise from a 27.4% year-on-year decline in Q1 2025 to 22.4% growth by Q1 2026.
Its 2025 and 2026 EPS estimates were raised by 7% and 6%, respectively, placing the 2026 EPS 23% above consensus. The price target was lifted from €30 to €33.
Infineon received more measured upgrades. Despite euro strength and tariff-related caution, Jefferies noted no material order weakness.
AI-related demand remains robust, with FY25 revenues expected to reach €600 million and approach €1 billion in FY26.
EPS estimates for FY25 and FY26 were raised by 2% and 4%, respectively, with the 2026 estimate 8% above consensus. The price target was increased from €42 to €45.
Ams OSRAM saw EPS estimate increases of 2.5% for FY25 and 6.4% for FY26, driven by improving demand across its industrial, automotive, and consumer segments. The FY26 EPS forecast is now 54% ahead of consensus.
Jefferies also cited potential €500 million in asset sales, including progress on selling the Kulim fab, as balance sheet improvements that could support further stock re-rating. The price target was raised from €11 to €13.
Melexis NV (EBR:MLXS), which is rebounding from a prior inventory correction, had its FY25 and FY26 EPS estimates increased by 3% and 5%, respectively, with the FY26 estimate now 16% above consensus.
Jefferies projects a 14.6% revenue growth for FY26, driven by content expansion in body-comfort-safety applications and growing design wins in China. Its price target was raised from €66 to €80.
Jefferies expects the current cyclical upturn to persist through Q4 2025, supported by normalized inventory levels and improving end-market demand.
Despite cautious guidance from supply chain participants, order strength in both automotive and industrial segments continues to surprise to the upside, particularly in the U.S. and China.