Nordic Earnings: Shares Jump 35% Converging With Our NOK 127 Fair Value Estimate, Which We Maintain

Narrow-moat Nordic Semiconductor's shares jumped by a sharp 35% in trading on April 24, reaching NOK 120 per share and mostly converging with our NOK 127 fair value estimate, which we maintain. The surprise came from Nordic’s second-quarter guidance, which implies an important acceleration to NOK 115 million- NOK 135 million in revenue compared with the weak NOK 74.5 million recorded this quarter. Nordic’s guidance is in line with our assumptions as we expect a sequential acceleration in revenue through the year from the very low base recorded in the first quarter. At this point, we recommend investors look for opportunities with a higher margin of safety, given the low visibility of Nordic’s financials as management does not provide yearly guidance and sales are normally lumpy given consumer exposure and high revenue concentration. We assume a high-single-digit revenue decline in 2024, followed by a strong 37% recovery in growth in 2025, reaching almost EUR 700 million in sales at a 9% operating margin.