When investors look at the top and flop lists of the stock market year to date, they will quickly find Aixtron stock among the few winners. With a price increase of more than 40 percent, the plant manufacturer from Herzogenrath in Westphalia is one of the best stocks in the Tec-Dax and M-Dax. The company was recently unimpressed by the negative factors affecting the economy as a whole – the stock market has rewarded this.
In the most recent quarterly report it was said that the current global crisis situations and market developments would continue to have only a minor impact on business overall. Logistics and supply chains remain tense, but are still stable from Aixtron’s point of view. In addition, the company, which makes manufacturing machinery for the semiconductor industry, is benefiting from some key trends.
High demand for power-saving components
On the one hand, Aixtron benefits from a high demand for particularly energy-saving components, which play an important role in the production of solar systems, electric cars or electric car filling stations, for example. But things have also been going well recently in the area of machines for the production of optoelectronic components such as LEDs. As a result, Aixtron was able to record its highest order intake in eleven years in the second quarter of 2022, while sales and profits increased significantly.
In the first half of the year, orders increased by 7 percent to EUR 282.8 million, and by almost 10 percent to EUR 152.6 million in the second quarter. The management referred to the continuing high demand across almost all end markets, but especially for systems for the volume production of micro LEDs and efficient power electronics based on the material systems silicon carbide (SiC) and gallium nitride (GaN).
The equipment order backlog as of June 30 was 314.4 million euros compared to 295.0 million euros on the same date in the previous year. Sales revenues climbed by 63 percent to EUR 191.1 million in the first half of the year, while the operating result (EBIT) even improved by 537 percent to EUR 31.4 million. The corresponding EBIT margin was 16 percent. Accordingly, Aixtron is positive about the year as a whole:
The targets for the full year 2022 were confirmed. The 2022 order intake is expected to be between 520 and 580 million euros, while sales are expected to reach between 450 and 500 million euros. In addition, the Management Board expects a gross margin of around 41 percent and an EBIT margin of around 21 to 23 percent.
Most analysts are now recommending buying
In view of such a development, it is not surprising that most analysts were also satisfied. The bottom line is that most advise buying, the average price target is 29 euros. At Berenberg, the positive surprise in terms of incoming orders was particularly emphasized. This ensured that the price target for the Aixtron share was raised from 26 to 28 euros, while the “buy” rating was confirmed. At Deutsche Bank (rating: “Buy”; price target: EUR 27) and at Warburg Research, the focus was on incoming orders, which exceeded expectations. In the case of the latter, the price target and rating for the Aixtron share were also EUR 27 and “Buy” respectively.
Aixtron shares have not only been among the winners since the beginning of the year. The paper has already been one of the high flyers from the German tech sector for the past two years. After a Corona-related setback in March 2020 to EUR 6, prices went into a steep, volatile catch-up rally, during which they rose to an eleven-year high of EUR 28 by May 2022.
After a correction to EUR 20 in July, the price has since risen again to EUR 25 at times. If the upward movement continues, the next price target in the chart is the May 2022 top at EUR 28, above which the 2011 high for the year at EUR 34 would be the next target.
Even if Aixtron is currently very promising in terms of chart technology, the share has not been the best choice for long-term investors so far. In the past there were always steep rollercoaster rides, which is why, for example, only a moderate price gain of 6.4 percent per year on average is calculated over a 20-year period. In the same period, however, the comparison indices M-Dax and Tec-Dax increased by an average of 11.1 and 9.3 percent annually.
For many investors who entered the market at a high price level in the past, Aixtron was even a real capital destroyer. This is shown by the fact that the Aixtron share is still well below the former record highs of more than 87 euros from 2000, despite the strong price development since spring 2020. But as the old stock exchange master André Kostolany once said so beautifully: “Anything is possible on the stock exchange. Also the opposite.”
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