Deutsche Bank has upgraded its rating on BESemiconductor (BESIY, Financial) shares from Hold to Buy, reflecting increased confidence in the company's potential. The bank also raised its price target for Besi, moving it up to EUR 125 from a previous target of EUR 95.
This optimistic adjustment comes as Deutsche Bank advises investors to look beyond the current challenges in the mainstream market. Key insights from industry conversations suggest a significant uptick in hybrid bonding volumes for Besi in the years 2026 and 2027, which are expected to present a substantial growth opportunity compared to 2025.
BESIY Key Business Developments
Release Date: April 23, 2025
- Revenue: EUR144.1 million, down 1.5% year-over-year.
- Orders: Increased 3.3% year-over-year and 8.2% quarter-over-quarter.
- Net Income: EUR31.5 million, decreased 7.4% year-over-year.
- Gross Margin: Trending towards the lower end of target range due to less favorable product mix and currency headwinds.
- Operating Expenses: Decreased 8.9% year-over-year; increased 10.3% quarter-over-quarter due to higher consulting costs.
- Cash Flow: Net cash increased by 10.8% quarter-over-quarter to EUR159.4 million.
- Share Repurchase: EUR22.1 million repurchased in Q1 '25, total EUR51.4 million under current program.
- Dividend: EUR172.5 million approved, equating to EUR2.18 per share.
- Guidance for Q2 '25: Revenue forecasted to be flat plus or minus 10% versus Q1 '25; gross margins between 62% and 64%; operating expenses to decrease 0% to 10% versus Q1 '25.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BESIY reported solid first quarter results with important new advanced packaging orders despite a challenging market environment.
- Orders increased by 3.3% compared to the first quarter of last year, driven by increased bookings from Asian subcontractors and AI-related data center applications.
- Cash flow generation remained positive, with net cash increasing by 10.8% compared to the fourth quarter of last year.
- BESIY repurchased EUR22.1 million of its shares, bringing the total cumulative purchase to EUR51.4 million under the current EUR100 million program.
- Applied Materials announced a 9% ownership position in BESIY, further validating BESIY's wafer-level assembly technology and strategy.
Negative Points
- Revenue decreased by 1.5% compared to the first quarter of last year due to ongoing weakness in mobile and automotive end-user markets.
- Net income decreased by 7.4% compared to the first quarter of last year, primarily due to lower revenue and gross margins.
- Gross margin trended towards the lower end of the target range due to a less favorable product mix and adverse currency movements.
- Operating expenses grew by 10.3% sequentially due to higher consulting costs, despite efforts to control overhead development.
- The timing and trajectory of a mainstream assembly upturn are difficult to predict due to new tariff uncertainties, impacting market confidence.
