Shares of German chipmaker Infineon Technologies AG (DE:IFX) declined over 3% as of writing after the company missed Q1 top-line expectations and lowered its revenue guidance for the full year Fiscal 2024. Weak demand for chips in key end markets continues to impact semiconductor players. IFX shares are down more than 7% in the past year.
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More on Infineon’s Performance
Infineon’s revenue declined 6% year-over-year to €3.7 billion in Q1 FY24, while profit was down 19% to €587 million. Analysts expected a profit of €549 million on revenue of €3.82 billion. Tough macro conditions have hit consumers’ spending on discretionary goods. Consequently, chipmakers are seeing lower demand for their products in personal electronics and certain other end markets.
Given a challenging business backdrop and currency headwinds, Infineon now expects full-year FY24 revenue of €16 billion plus or minus €500 million, down from the previous guidance of €17 billion plus or minus €500 million. Additionally, the company projects its FY24 segment result margin (SRM) in the low-to-mid-twenties percentage range versus the prior guidance of about 24% margin.
In particular, Infineon expects its revenue from the Automotive segment to grow in the low double-digit percentage range in FY24. However, revenues from Gross Industrial Power, Power & Sensor Systems, and Connected Secure Systems segments are expected to decline.
The company’s Q2 FY24 guidance was also underwhelming, with revenue expected to be around €3.6 billion, marking a decline from €4.1 billion in the comparable quarter of the prior year.
What is the Price Target for Infineon Shares?
Following the results, four analysts reiterated a Buy rating on IFX stock, while JPMorgan analyst Sandeep Deshpande reaffirmed a Hold rating with a price target of €38.50.
Among the bulls, Stifel Nicolaus analyst Juergen Wagner maintained a Buy rating with a price target of €45, citing continued momentum in Infineon’s Automotive business, which is a critical industry segment for the company.
Wagner contended that while the Q2 FY24 guidance seems weak, the quarter could mark a bottom for the company, with a possibility for a recovery thereafter.
Despite near-term pressures, most analysts are bullish on Infineon Technologies shares. With 14 Buys and one Hold, IFX stock scores a Strong Buy consensus rating. The Infineon Technologies share price target of €46.07 implies nearly 38% upside potential.
