Northland has adjusted its price target for Bel Fuse (BELFA, Financial), reducing it from $117 to $93. Despite this downward revision, the brokerage maintains an Outperform rating for the company’s shares, citing the firm’s robust first-quarter results as an indicator of its business resilience.
The firm attributes the revised price target to a lower multiple, rather than any change in the company's performance or outlook. Northland highlights Bel Fuse’s successful growth initiatives and enhanced profit margins, which have reinforced their view of the company's significant protection against tariffs.
This assessment underscores Bel Fuse’s ability to navigate economic challenges while maintaining strong operational fundamentals, as reflected in its Q1 performance.
BELFA Key Business Developments
Release Date: April 25, 2025
- Revenue: $152.2 million in Q1 2025, an 18.9% increase from Q1 2024.
- Gross Margin: Improved to 38.6% in Q1 2025, up from 37.5% in Q1 2024.
- Power Solutions and Protection Sales: $83.1 million in Q1 2025, a 37.9% increase from Q1 2024.
- Connectivity Solutions Sales: $50.7 million in Q1 2025, a decrease of 6.5% from Q1 2024.
- Magnetic Solutions Sales: $18.5 million in Q1 2025, a 36.1% increase from Q1 2024.
- Total Backlog: $395.7 million, a 4% increase compared to December 31, 2024.
- R&D Expenses: $7.2 million in Q1 2025, increased due to the acquisition of Enercon.
- SG&A Expenses: $29.5 million, representing 19.4% of sales, increased by $4.6 million from 2024.
- Cash and Securities: $67 million at the end of Q1 2025, a decrease of $2 million from the end of 2024.
- Net Cash from Operating Activities: $8.1 million in Q1 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bel Fuse Inc (BELFA, Financial) reported a strong first quarter with sales reaching $152.2 million, reflecting an 18.9% increase from the first quarter of 2024.
- The company's recent acquisition of Enercon has performed well, contributing to diversification and growth, particularly in the aerospace and defense markets.
- Gross margin improved to 38.6% in Q1 2025, up from 37.5% in Q1 2024, driven by favorable product mix and cost reduction initiatives.
- Sales of Power Solutions and Protection grew by 37.9% compared to the same period last year, largely due to increased aerospace and defense exposure.
- The Magnetic Solutions Group recorded a 36.1% increase in sales compared to the first quarter of 2024, with gross margin improving significantly by 870 basis points year-over-year.
Negative Points
- Sales in the consumer market decreased by $2.8 million in Q1 2025 compared to Q1 2024, primarily due to trade restrictions on a Chinese supplier.
- The Power segment experienced a gross margin decline of 140 basis points from Q1 2024, attributed to nonrecurring items recorded at a 100% gross margin in the previous year.
- Connectivity Solutions Group sales decreased by 6.5% compared to Q1 2024, with commercial air applications down by 12% year-over-year.
- The company faces challenges with global tariffs, particularly affecting approximately 25% of its consolidated sales, with potential impacts on Q2 performance.
- Bel Fuse Inc (BELFA) anticipates less clarity and potential downside related to tariffs in the second quarter, with revenue guidance ranging from $145 million to $155 million.
