Wednesday, B.Riley downgraded Vishay Precision Group (NYSE: NYSE:VPG) from Buy to Neutral and lowered the price target to $36 from $37. The adjustment came after Vishay Precision reported first-quarter results on Tuesday, indicating revenue was affected by continued demand softness and mixed customer order trends across various end markets. The company has seen an unprecedented six consecutive quarters with a book-to-bill ratio of less than 1.0x.
Vishay Precision Group's first-quarter performance showed revenues of $81 million, a decrease of 9.1% year-over-year and 9.8% quarter-over-quarter, which was at the lower end of the guidance range of $80 million to $90 million. The second-quarter sales outlook is set between $75 million and $85 million, suggesting a year-over-year midpoint decline of 11.9% and indicating that current challenges could continue for the next two to three quarters.
In response to the latest earnings report, B.Riley revised its 2024 revenue and EBITDA projections for Vishay Precision Group from $347 million and $48 million to $315 million and $42 million, respectively. The firm now anticipates a return to sustainable year-over-year growth to be delayed until 2025.
Despite the downgrade, B.Riley noted positive developments in the company's gross margins, which reached 43.4% in the first quarter, up by 40 basis points quarter-over-quarter and exceeding the firm's 42.1% projection. This improvement is attributed to Vishay Precision Group's ongoing transition projects aimed at shifting manufacturing to lower-cost locations.
B.Riley concluded that while near-term upside for the stock seems limited, a more constructive view might be warranted once the company's book-to-bill ratio sustains a recovery above 1.0x, potentially leading to higher revenue and providing upside to the firm's 2025 growth projections.
InvestingPro Insights
In light of the recent financial analysis by B.Riley, InvestingPro data provides additional context for investors considering Vishay Precision Group (NYSE: VPG). The company's market capitalization stands at $448.83 million, reflecting its current valuation in the market. With a P/E ratio of 19, which adjusts to 16.88 based on the last twelve months as of Q1 2024, investors can gauge the company's earnings relative to its share price. Furthermore, the gross profit margin for the same period is a robust 42.82%, which aligns with the positive gross margin developments noted by B.Riley.
Among the InvestingPro Tips, two particularly stand out: Vishay Precision Group holds more cash than debt, which may offer financial flexibility in times of uncertainty, and the company's liquid assets exceed its short-term obligations, indicating a strong short-term financial position. However, it's worth noting that two analysts have revised their earnings downwards for the upcoming period, which aligns with the cautious outlook presented by B.Riley.
For investors seeking a deeper dive into Vishay Precision Group's financial health and future prospects, InvestingPro offers additional tips. By visiting https://www.investing.com/pro/VPG, investors can access these insights and use the coupon code PRONEWS24 to receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are 7 additional InvestingPro Tips available for Vishay Precision Group, providing a comprehensive analysis for informed investment decisions.
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