Analyst Note| Brian Colello |
Narrow-moat Infineon reported strong fiscal first-quarter results on the profitability front and provided investors with a relatively bright forecast for the March quarter and for all of fiscal 2023 (ending in September). Although Infineon, like its peers, is seeing very soft demand for chips going into personal electronics devices, the company’s automotive and renewable energy products are still prospering from robust demand. We maintain our fair value estimate of EUR 43 for German shares but raise our U.S. ADR to $48 from $44 due to currency effects. Shares were up 8% on the bright news, but we still view Infineon’s shares as undervalued and one of our top picks, thanks to the firm’s healthy exposure to electric vehicles.