Infineon: Investing despite a decrease in profits?

Last Updated: 23. Februar 2024By

Infineon Technologies AG is a leading manufacturer of semiconductor solutions and develops products for various applications – energy efficiency, mobility, data centers, and security. The Munich-based company has now released its figures. Should you add the chip stock to your portfolio?

24% less profit The profit amounted to 587 million euros, compared to 728 million euros a year ago. The German company’s revenue was 3.70 billion euros, compared to 3.95 billion euros. Analysts had expected a profit of 637.4 million euros or 0.49 euros per share, while revenue was estimated at 3.83 billion euros. The 24% decline in profit is particularly concerning. Is this just a one-time event?

Less investment Infineon will now slow down the expansion of its plant in Kulim, Malaysia. Investments in the current fiscal year will be reduced by about 400 million euros to 2.9 billion euros. „We are consistently adapting to the situation as a company to achieve our financial goals for the current fiscal year,“ said Jochen Hanebeck, member of the Infineon board.

Less revenue in the next quarter The company expects revenue of 3.6 billion euros in the second quarter and 16 billion euros for the entire fiscal year 2024, compared to a previous estimate of 17 billion euros.

Not a good start in 2024 – Analysts still convinced Conclusion: Given the mixed figures and the limited outlook, it is no wonder that the chip stock has not performed well this year – a sharp downward trend. However, analysts are still convinced of the stock. 20 out of 23 analysts recommend buying and 3 recommend holding. What’s more, not a single analyst recommends selling. The average analyst price target is 54 euros, with the highest analyst price target at 54 euros, offering a potential of 58%. With a P/E ratio of 18, Infineon is moderately valued. Just for comparison: Despite a strong increase in share price, US chip stock Qualcomm is valued lower than Infineon with a P/E ratio of 16.