European Semiconductors: IFX/STM: From Trough To Throttle

HSBC reiterates Buy ratings for Infineon and STMicroelectronics, raising price targets as the analog semiconductor upcycle strengthens with incoming price hikes and higher volume demand.

Key Takeaways

• 1.Analog semiconductor cycle is strengthening due to positive demand surprises and multiple price hikes.
• 2.Infineon price target raised to EUR107 from EUR68; Buy rating maintained.
• 3.STM price target raised to EUR84 from EUR53; Buy rating maintained.

Table of Contents

• Key changes to ratings and estimates
• Disclosures & Disclaimer
• Recent data points suggest strengthening demand recovery
• Another round of price increases coming
• Recent data points suggest further price increases at analog companies
• Cumulative impact of price increases could be significant, potentially around 20%
• Upside to consensus revenue and margin expectations
• Target operating models may see upside as margins recover
• Infineon: Raise estimates and TP on stronger demand backdrop
• Raise estimates; upside potential to consensus
• Infineon: Changes to our estimates
• Infineon: Underlying gross margins (excluding underloading charges)
• Infineon – HSBC estimates vs Visible Alpha Consensus
• Raise target price to EUR107 from EUR68
• Infineon: Target price and bull bear scenario analysis
• Catalysts
• Infineon: Income statement
• Automotive divisional revenue breakdown
• PSS revenue growth breakdown
• Group revenue split by contribution from key growth drivers
• STMicroelectronics: raise estimates, lift TP to EUR84
• STMicroelectronics – Changes to our estimates
• STMicroelectronics: Gross margins ex underloading charges – we now model gross margins ex underloading charges to reach the highs seen in 2023
• STMicroelectronics: HSBC estimates vs consensus
• STMicroelectronics: Revenue growth by end market
• Raise TP to EUR84 from EUR53
• STMicroelectronics: Valuation – base, bull, and bear scenario analysis
• Financials & valuation: STMicroelectronics
• Financials & valuation: Infineon Technologies AG
• Disclosure appendix

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