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AEM Holdings Ltd: Sell Rating Due to Weak Margins, High Valuation, and Revenue Declines

AEM Holdings Ltd: Sell Rating Due to Weak Margins, High Valuation, and Revenue Declines

UOB Kay Hian analyst John Cheong maintained a Sell rating on AEM Holdings Ltd. (AWXResearch Report) today and set a price target of S$1.09.

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John Cheong has given his Sell rating due to a combination of factors impacting AEM Holdings Ltd. Despite reporting first-quarter earnings that align with expectations, the company’s net margin remains weak at 3.9%, primarily due to insufficient operating leverage and higher initial costs for new products before they reach mass production. The valuation appears high, trading at 18 times the projected 2025 price-to-earnings ratio, which suggests the stock may be overvalued relative to its earnings potential.
Furthermore, both of AEM’s primary segments have shown weaker year-over-year revenue performance. The Test Cell Solutions segment, despite successfully deploying new technology, experienced a significant revenue decline due to prior pull-in orders by a major customer. The Contract Manufacturing segment also saw a slight decrease in revenue, although its diverse customer base provided some stability. Given these challenges and the uncertain outlook for the second half of 2025, John Cheong maintains a cautious stance with a target price of S$1.09.

According to TipRanks, Cheong is ranked #1026 out of 9519 analysts.

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