XFAB: Future Returns Will Improve As Revenue Guidance Supports Profitability

Analysts have trimmed their price target on X-FAB Silicon Foundries to EUR 6 from EUR 6.86, reflecting a more cautious stance on the shares after a recent downgrade to Hold.

Analyst Commentary

Analysts note that while the revised price target implies more limited upside, the company still retains attributes that support a neutral stance rather than a more negative view.

Bullish Takeaways

• Bullish analysts highlight that the revised EUR 6 price target still sits above recent trading levels, suggesting some remaining upside if execution stabilizes.
• They point to the company’s established position in specialty semiconductor foundry services as a foundation for long term growth once demand normalizes.
• Solid customer relationships and exposure to structural trends in electrification and industrial applications are seen as supportive to medium term revenue visibility.

Bearish Takeaways

• Bearish analysts argue that slower than expected order momentum limits near term earnings leverage, which they see as justifying a Hold rating and lower valuation multiples.
• They caution that elevated investment needs and a challenging pricing environment could delay margin expansion and free cash flow inflection.
• Concerns persist that macro uncertainty and cyclicality in end markets may cap growth, leaving limited room for the shares to significantly rerate above the new target.

What's in the News

• Issued new revenue guidance for the fourth quarter of 2025, targeting between USD 215 million and 225 million, signaling expectations for continued demand in specialty foundry services (company guidance).
• Set full year 2025 revenue guidance in the range of USD 863 million to 873 million, providing increased visibility on medium term growth and capacity utilization (company guidance).
• Announced that long serving CEO Rudi De Winter will step down on February 6, 2026, after more than a decade in the role, while remaining on the Board of Directors (company announcement).
• Appointed current COO Damien Macq as CEO effective February 6, 2026, with plans for him to join the Board subject to shareholder approval, highlighting a planned and gradual leadership transition (company announcement).

Valuation Changes

• Fair Value: unchanged at €6.86 per share, indicating no material revision to the intrinsic value estimate, despite the lower price target rounding to €6.00.
• Discount Rate: stable at 12.3%, suggesting no reassessment of the company’s risk profile or cost of capital in the updated model.
• Revenue Growth: effectively unchanged at around 8.2% per year, pointing to consistent expectations for the company’s top line trajectory.
• Net Profit Margin: flat at approximately 11.9%, implying no significant change in assumptions for long term profitability.
• Future P/E: nudged slightly higher from 11.61x to 11.69x, indicating a marginally increased multiple applied to the company’s forward earnings.