Analyst Note| Brian Colello, CPA |
Infineon reported solid fiscal first-quarter results with particularly impressive gross margin expansion, while also providing investors with a decent outlook for the March quarter. Similar to many of its peers, Infineon is seeing chip demand outstripping supply, especially in automotive where many OEMs can no longer build cars due to a lack of certain chips. This under-supply situation enabled Infineon to fully utilize its factories this quarter and we expect this to persist for the rest of fiscal 2021 (ending in September). We anticipate a strong year for Infineon in fiscal 2021, but it might take until fiscal 2022 for the supply constraints to alleviate. We will maintain our EUR 30 fair value estimate for narrow-moat Infineon and shares appear slightly overvalued to us today.