Infineon Technologies Shares Rise on Recovery Hopes

By Nina Kienle

Infineon Technologies shares rose Tuesday after the company set out fresh guidance that analysts said reinforces confidence in its recovery prospects.

At 0836 GMT, shares trade 9.2% higher at EUR35.25.

The German chip maker posted its second quarter results, with the main focus being a substantial cut to its 2024 guidance. The company said it is aiming for revenue of around 15.1 billion euros ($16.26 billion) plus or minus EUR400 million in sales for the year ending in September, down from EUR16.31 billion in fiscal year 2023. Its segment result margin--a key profitability metric--is expected at around 20%, compared with 27% in fiscal 2023.

The group had previously guided for roughly EUR16 billion in revenue and a segment result margin in the low-to-mid-20s percentage range.

The cut is not anywhere near the worst year-on-year decline seen by Infineon, unlike at peer STMicroelectronics, whose guidance for fiscal 2024 is the worst decline since 2001, JPMorgan analysts said in a research note to clients.

"Given that the cut is substantial and the company is saying that the worst has now been seen and it expects an improvement in the June quarter on a quarter-on-quarter basis, the stock is likely to be up on this report," JPM analysts said.

"With guidance for the third quarter a slight improvement over what we've seen in the first half and full year guidance implying a stronger recovery in the fourth quarter, Infineon is now looking towards cyclical recover," Bernstein analysts Sara Russo and Chris Elias said in a note.

Write to Nina Kienle at nina.kienle@wsj.com

(END) Dow Jones Newswires

May 07, 2024 05:14 ET (09:14 GMT)

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