On Saturday, UBS has adjusted its outlook on VAT Group AG (SIX:VACN:SW), a company specializing in the manufacture of vacuum valves, by reducing its price target to CHF350 from the previous CHF370. The firm maintains a Neutral stance on the stock. The revision reflects UBS's analysis of leading indicators and supply chain checks, which suggest a lack of evidence for a near-term recovery in semiconductor capital expenditures (capex).
The analyst at UBS noted that recent trends in semi memory chip prices, which have been relatively flat or slightly down, do not indicate an imminent rebound in semiconductor wafer fabrication equipment (WFE) capex. This assessment is supported by channel checks and evaluations of recent data points and statements within the semiconductor vacuum supply chain.
Due to these findings, UBS anticipates that VAT Group will not experience a significant quarter-over-quarter profit and loss improvement in the first half of 2025 (H1 25E), compared to the fourth quarter of 2024 (Q4 24E). The consensus among players in the semiconductor vacuum sector aligns with this view, with expectations setting the potential recovery in the semiconductor end market no earlier than summer 2025, as also echoed in recent statements by a peer in the industry.
The report underscores a cautious outlook for VAT Group's near-term financial performance, based on the current status of the semiconductor industry, which is a key market for the company's products. VAT Group's stock performance and investor expectations may be influenced by these industry dynamics as well as the company's ability to navigate the anticipated market conditions.
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