Even after the consolidation of the acquired US competitor Cypress, the major Swiss bank UBS sees further IFX stock price drivers for the share of the chip manufacturer Infineon . Analyst David Mulholland raised his price target for the share from EUR 22.00 to EUR 23.50 and confirmed his “Buy” investment recommendation in a study published on Wednesday. He sees a price potential of 33 percent.
As soon as the analysts incorporated the takeover into their estimates, the consensus estimates for Infineon will again provide more clarity, the expert wrote. At the same time, he sees other catalysts for the shares, because in China the auto market is now recovering and in the USA and Europe auto production will start up again or preparations are in progress. At the same time, estimates for the end markets have already been largely revised, which is why the Infineon share is likely to experience positive momentum on the way to the second half of 2020.
Mulholland also regards risks with a view to the demand situation or with regard to increased inventories as relatively low. In his opinion, the stock currently offers the comparatively strongest upside potential in the European semiconductor sector. In the event of a recovery by 2021, balance sheet debt is likely to decline rapidly and a whole series of Munich’s core markets could receive additional stimuli as they recover.
The analyst praised the strategic logic behind the Cypress acquisition and its expected earnings contribution. Accordingly, Mulholland raised its earnings forecasts (EPS) by 2022. For 2021 and 2022, he increased them by around 20 percent each.
With the “Buy” rating, UBS assumes that the total return on the share (price gain plus dividend) will be at least six percent higher than the market return expected by UBS over a period of twelve months.