SQNS Will See Buybacks And Design Wins Drive Future Upside

Analysts have reduced their price target on Sequans Communications to $35.00 from $75.00, citing near term sales shortfalls tied to project timing and supply constraints, but highlighting accelerating design wins and strategic capital deployment as support for a still constructive outlook.

Analyst Commentary

Bullish analysts acknowledge near term execution headwinds but argue that the medium term investment case for Sequans remains intact, supported by a growing portfolio of design wins and a more shareholder friendly capital allocation strategy. While the reduced price target reflects lower near term sales expectations, it still embeds meaningful upside from current levels, underscoring confidence in the company’s ability to reaccelerate growth.

Initiation of coverage with a Buy rating and a fresh valuation framework has added to the constructive sentiment, signaling that more of the market is beginning to engage with Sequans’ long term growth story. Analysts see recovering demand trends, improving supply visibility, and a broader customer pipeline as key drivers that can support both revenue expansion and multiple re rating over the next few years.

Bullish Takeaways

• Price targets, even after recent reductions, continue to imply substantial upside. This reflects confidence that current supply and timing issues are temporary rather than structural.
• Expanding three year design win momentum is viewed as a strong leading indicator of future revenue growth. This is seen as supporting a premium valuation as these projects move into volume production.
• Redeeming bitcoin holdings to fund share repurchases is seen as a disciplined capital allocation move that can enhance per share value and signal management’s conviction in the equity.
• New Buy rated coverage with a defined upside target reinforces the view that Sequans is underappreciated by the broader market. This is viewed as creating a favorable risk reward profile as execution normalizes.

Valuation Changes

• Fair Value: lowered materially, with the modeled intrinsic value per share reduced from $75.00 to $35.00.
• Discount Rate: raised moderately, increasing from 11.1% to 13.5% and implying a higher required return and risk premium.
• Revenue Growth: raised significantly, with the long term growth assumption moving from approximately 25.9% to 44.7%.
• Net Profit Margin: trimmed slightly, with the long run margin forecast reduced from about 14.1% to 12.1%.
• Future P/E: lowered meaningfully, as the target forward earnings multiple declines from roughly 148.8x to 83.6x.