AIXG : NASDAQ : US$15.77
SELL Target: US$7.00
AIXTRON is a manufacturer of capital equipment used in the production of silicon and compound semiconductor applications. Specifically, it produces MOCVD deposition equipment for the manufacture of LEDs and other optoelectronic devices as well as deposition tools for silicon-based semiconductor applications.
Sustainability — Energy & Power Technologies NO SURPRISES FROM Q4 REPORT/GUIDE
We maintain our SELL rating on AIXG as the quarter and commentary has not changed our view that shares are overvalued relative to the next cycle’s opportunity.
Investment highlights AIXTRON reported more or less in line but issued 2014 guidance below consensus and our estimates.
While the company is confident in an LED-driven MOCVD recovery, it does not yet have the visibility into its timing and is conservatively estimating 2014 will not see a significant return to growth.
We believe that the company has made some strong progress through its 5-point program to cut costs; however, the business still appears too large to support what we believe will be a smaller cycle than last time.
Compounding the high-cost structure and smaller overall capital cycle, we believe that AIXTRON remains burdened by losses in market share due to higher costs of ownership. As part of the remedy AXITRON is being too aggressive with pricing, deepening the losses.
We do expect a pickup, perhaps even sooner than the company, but believe that the market has placed too high a premium on AIXTRON’s earnings power over the next cycle.