Kepler raises X-FAB to "buy" citing wafer demand recovery, shares jump
BUZZ-Kepler raises X-FAB to "buy" citing wafer demand recovery, shares jump ** Shares in X-FAB XFAB.PA rise 10% after Kepler Cheuvreux upgraded the French silicon wafer manufacturer to "buy" from "hold" with a PT of €10.50
** Kepler says demand is starting to improve for X-FAB chip wafers, even though the company's recent numbers have not yet shown the recovery
** The broker says X-FAB should benefit strongly when orders return because many of its costs are fixed; making more wafers would spread those costs over more sales and lift profit margins
** "The stock has already begun to re-rate, but consensus has not", Kepler says; shares are up over 60% YTD
** Kepler says X-FAB's largest customer Melexis MLXS.BR has described demand as strengthening "day after day, week after week"
** The broker says demand linked to AI power equipment should help X-FAB's industrial business, while reducing its reliance on the more cyclical car market
(Reporting by Nathan Vifflin in Gdansk)
((nathan.vifflin@thomsonreuters.com; +48 58 769 67 13;))