TD Cowen analyst Krish Sankar maintained a Hold rating on Advanced Energy (AEIS – Research Report) yesterday and set a price target of $118.00.
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Krish Sankar’s rating is based on a combination of factors that present both opportunities and challenges for Advanced Energy. The company reported a strong performance in the datacenter sector, with record revenues in the March quarter and a positive outlook for the upcoming quarter. This strength is expected to continue as new products like eVoS and eVerest ramp up, potentially boosting semiconductor sales. Additionally, the company’s limited exposure to China and the closure of its manufacturing facility there are anticipated to enhance operational efficiencies and support margin improvements in the latter half of 2025.
However, there are mixed signals that temper the overall outlook. The telecommunications and networking sectors are expected to bottom out, and while there are signs of inventory recovery in the industrial and medical sectors, a challenging macroeconomic environment could hinder growth. Furthermore, the company has increased its capital expenditure to support new semiconductor products and meet the growing power demands of AI datacenters, which could impact financial flexibility. These mixed factors contribute to the Hold rating, as they suggest a balanced risk-reward scenario for investors at this time.