On Thursday, Citi analyst Roland Shu adjusted the price target for shares of MediaTek Inc. (2454:TT) (OTC: MDTKF), a leading semiconductor company. The new price target is set at NT$1,250.00, reduced from the previous NT$1,420.00, while the Buy rating on the stock remains unchanged.
The revision reflects a mix of expectations for MediaTek's business segments. The company's flagship System on a Chip (SoC), the Dimensity 9400, is anticipated to start shipping in the fourth quarter of 2024, with a significant backlog projected to extend into the first quarter of 2025.
This is expected to positively impact the smartphone business with improved average selling prices (ASPs) and gross margins (GM), potentially allowing MediaTek to hit the high end of its third-quarter sales guidance, which forecasts a range from a 3% decrease to a 4% increase quarter-over-quarter.
However, the analyst also pointed out that MediaTek's non-smartphone segments, particularly its TV SoC and Internet of Things (IoT) businesses, are approaching a slower season, leading to an expectation of flat quarter-over-quarter performance in the fourth quarter of 2024.
Looking ahead into 2025, Citi has lowered its estimates for MediaTek by 8%, anticipating a softer year-over-year growth trend, especially in the first quarter of the year. Despite this, the firm expects MediaTek to regain momentum in the second half of 2025, driven by demand for AI Application-Specific Integrated Circuits (ASIC) and increased revenue from the PC and automotive sectors.
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