Investing.com -- Shares of BE Semiconductor Industries (AS:BESI) has updated its 2024 outlook on Thursday, stating that both revenue and operating profit are expected to come in 5% and 10% below consensus estimates, respectively.
“Besi is experiencing persistent cyclical challenges, with China and automotive cited as more than offsetting growth in computing end markets,” said analysts at Citi Research in a note.
Although shipments of hybrid bonding tools are on the rise, their growth is not meeting earlier projections due to customer delays—mostly from Intel—leading to a wide revenue range for the fourth quarter, projected to be flat quarter-on-quarter, with potential fluctuations of +/-10%.
The company reported third-quarter figures that were slightly ahead of consensus, with revenue and profit exceeding expectations by 3% and 5%, respectively.
“We look to find out more about the nature of the delays and timing of shipment of tools still in backlog. A 7 tool shortfall out of the 15 tools we model for 4Q24 would square our views against the guide,” said analysts at Morgan Stanley (NYSE:MS) in a note
However, the real concern lies in the disappointing order intake of €152 million, much below the consensus estimate of €176 million and down sharply from €185 million in the previous quarter.
The company expects that the fourth quarter will see an increase in hybrid bonding orders, buoyed by interest in their thermo compression bonding tools, prompting them to expand production capacity in Malaysia.
Despite the long-term attractiveness of BE Semiconductor's hybrid bonding offerings, the current cycle's challenges and the slow adoption of this technology are likely to continue exerting pressure on the company’s shares.
The anticipated slowdown in fourth-quarter performance has raised concerns among analysts, with Citi indicating that this negative momentum could further complicate the narrative surrounding BE Semiconductor.
The brokerage has noted that current consensus projections for 2025, which expect a robust 47% growth in revenue driven by both a favorable market cycle and hybrid bonding advancements, may be overly optimistic.
In light of this, Citi has adjusted its own 2025 revenue estimate to be 4% below consensus, reflecting a more cautious outlook for the semiconductor manufacturer.
Shares of the company were trading higher at 3.7% on Thursday.