'Next upcycle begins': Jefferies sees big upside for European semis
12/07/2023 08:07
** Jefferies says the semiconductor sector has entered a new
upcycle and expects it to result in material re-rating and
strong EPS growth over the next two years
** "We expect semiconductor growth rates to accelerate
through H2-23 following the ending of the inventory correction
in many segments like PCs, smartphones and servers," it says
** The broker expects global semiconductor revenue growth to
move into positive territory by early 2024, and to further
accelerate to H1 2025 cycle peak
** It predicts growth to positively surprise through
2024-2025 on the back of structural drivers including AI, cloud,
edge, IoT, EVs, ADAS, renewable energy and VR/AR
** "We forecast the industry to expand to $1trn over the
next 8-9 years," Jefferies says, and forecasts EPS of the stocks
it covers to grow between 35% and 180% in 2023-2025
** Jefferies raises STMicroelectronics STMPA.PA , Infineon
IFXGn.DE and Melexis MLXS.BR to "hold" from "underperform"
** Its top picks are ASML ASML.AS , ASM International
ASMI.AS , Aixtron AIXGn.DE , Soitec SOIT.PA and Alphawave
AWE.L (all "buy"), as it sees 48%-101% upside to their stock
prices over 12 months
** "We model AI to be a major driver of advanced logic wafer
demand and, therefore, the revenues of ASML and ASM" -Jefferies
(Reporting by Ozan Ergenay)
((ozan.ergenay@thomsonreuters.com))