Balancing Operational Progress and Demand Uncertainty: Rationale for Maintaining a Hold Rating

XP Power, the Industrials sector company, was revisited by a Wall Street analyst today. Analyst David Farrell from Jefferies maintained a Hold rating on the stock and has a p900.00 price target.

David Farrell has given his Hold rating due to a combination of factors that balance encouraging operational progress with remaining uncertainties. The fourth quarter showed the strongest revenue and order intake of the year, and the company’s decision to withdraw from the RF market in favor of its higher-margin LV and HV segments should gradually enhance profitability, with EBITA margins expected to improve over time. In addition, the planned ramp-up of production at the new Malaysian facility from FY26 is set to increase manufacturing flexibility and reduce capital expenditure needs, supporting the company’s operational efficiency.

At the same time, Farrell notes that while this trading update is robust enough to keep forecasts for FY25 and FY26 intact, it does not yet justify a more positive stance on the shares. Overall revenue for FY25 is still down year-on-year on a constant currency basis, highlighting that the recovery is not yet broad-based. Furthermore, the investment case now relies on a sustained rebound in semiconductor-related demand through the first half of FY26, an improvement that, while plausible based on current industry commentary, has not yet fully materialized. These mixed signals support maintaining a Hold rating rather than upgrading the stock at this stage.

According to TipRanks, Farrell is a 5-star analyst with an average return of 11.8% and a 69.51% success rate. Farrell covers the Industrials sector, focusing on stocks such as XP Power, Babcock International, and Chemring.

In another report released on January 17, TipRanks – DeepSeek also reiterated a Hold rating on the stock with a p864.00 price target.