StarPower Semiconductor Ltd (603290: CH) experienced a change in stock rating as Citi downgraded the company from Buy to Neutral.
The financial firm also adjusted the price target for StarPower's shares to RMB80.00, a significant decrease from the previous RMB139.28.
The downgrade comes after a reassessment of StarPower's earnings forecasts for the years 2024 and 2025, with expected reductions of 52% and 51% respectively.
The revision was prompted by a negative outlook on IGBT (Insulated Gate Bipolar Transistor) pricing, which is a crucial component in StarPower's product lineup.
The first and second quarters of 2024 were particularly challenging for the company, with disappointing results attributed to weakened demand and price erosion of IGBTs.
Citi's analysis indicates that the most severe price reductions occurred in the first half of 2024, and the firm anticipates a few catalysts that could drive a price recovery in the near term.
This is due to persistent demand uncertainties and the looming issue of new production capacities entering the market, which could exacerbate the supply/demand imbalance in the industry.
Despite the current outlook, Citi projects that StarPower's net profit will decrease by 39% in the current year. However, there is an expectation of a rebound with a forecasted growth of 29% in 2025.
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