On Tuesday, TD (TSX:TD) Cowen maintained a Hold rating on Vishay Intertechnology (NYSE:VSH) with a steady stock price target of $24.00. Following discussions with Vishay's new CEO Joel Smejkal, CFO Dave McConnell, and Head of Corporate Development Peter Henrici, the firm expressed optimism about the company's revamped strategic direction, which emphasizes growth investment and acknowledges the cyclical nature of the industry.
The meetings with Vishay's leadership, which were among the company's initial steps in engaging with the financial community after Smejkal's ascent to CEO in 2023 and its April Analyst Day, provided insights into the potential for substantial shifts in Vishay's culture, operational footprint, and overall strategy.
TD Cowen acknowledged that while the potential for meaningful transformation at Vishay is promising, the implementation of changes, especially those related to capacity investments, will require time. The firm indicated a preference to wait for evidence of a sustained demand recovery, which would enable Vishay's investments to yield financial results, before adopting a more positive stance on the stock.
The firm reiterated its financial forecasts for Vishay, maintaining revenue and earnings per share (EPS) estimates for fiscal years 2024 and 2025 at $3.08 billion/$0.90 and $3.35 billion/$1.45, respectively. The $24 price target is based on a multiple of 17 times the firm's 2025 EPS estimate.
TD Cowen's position reflects a cautious but attentive outlook on Vishay Intertechnology's progress under the new leadership, as the company navigates its strategic investments amid the industry's cyclical challenges.
In other recent news, Vishay Intertechnology's Q1 2024 report showcased mixed results. The company reported a revenue of $746.3 million, slightly surpassing their guidance range, despite a sequential revenue decline of 5% primarily due to inventory adjustments in semiconductor products.
On the brighter side, Vishay saw growth in the aerospace and defense sector by 34.2% year-over-year, and a slight 1% increase in automotive revenue. Still, the industrial and medical sectors experienced revenue decreases of 6.2% and 18.3% respectively.
The company anticipates the semiconductor inventory correction to continue into the second quarter but expects a recovery in the latter half of the year. Vishay also revealed a strategic plan focusing on capacity expansion and innovation, with an investment of $2.6 billion planned from 2023 to 2028. The company expects Q2 revenues to be around $750 million with a gross margin of 21.7%.
Lastly, Vishay reported an earnings per share (EPS) of $0.22 and a decrease in the backlog of orders from 5.3 months to 5.0 months. These are among the recent developments that investors should keep an eye on.
InvestingPro Insights
As Vishay Intertechnology (NYSE:VSH) charts a new course under CEO Joel Smejkal, the financial community is closely monitoring the company's performance metrics to gauge the effectiveness of its strategic pivot. According to real-time data from InvestingPro, Vishay's market capitalization stands at $3.01 billion, with a price-to-earnings (P/E) ratio of 12.57, reflecting investor sentiment about current earnings.
Adjusted for the last twelve months as of Q1 2024, the P/E ratio shows a slightly more favorable figure at 11.72. Despite a challenging environment, indicated by a revenue decline of 6.75% over the last twelve months, Vishay maintains a gross profit margin of 26.43%, demonstrating its ability to manage costs effectively.
An InvestingPro Tip highlights that Vishay has maintained dividend payments for 11 consecutive years, offering a current dividend yield of 1.81%, which may appeal to income-focused investors. Moreover, the company is trading near its 52-week low, potentially presenting a value opportunity for investors considering the firm's history of profitability over the last twelve months and moderate level of debt.
For those seeking a deeper dive into Vishay's financial health and future prospects, InvestingPro offers additional insights, with a total of 9 InvestingPro Tips available at https://www.investing.com/pro/VSH. Subscribers can use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of data and expert analysis to inform their investment decisions.
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