Bank of America: Soitec F1Q Preview — Photonics Upside Priced In; Lower Target Price
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Bank of America maintained a Neutral rating on Soitec but lowered its target price from 193 euros to 138 euros, citing that photonics-related upside is already priced in while mobile and edge AI businesses face downside risks. With Soitec scheduled to report F1Q revenue on July 28, analysts reduced their FY27-29E revenue forecasts by 3-8% and EBITDA estimates by 9-14%. The mobile segment remains pressured by a sluggish smartphone market and slow customer inventory digestion. Although the overall business is expected to recover from its FY26 profitability trough, high growth expectations for Photonics-SOI carry uncertainties regarding market share and content growth.
The firm's analysts expect mobile revenue to decline 11% in FY27E, steeper than the market consensus of a 6% drop, reflecting approximately two million RF-SOI wafers in customer inventory and delayed digestion. Meanwhile, the global team projects total data center optics revenue will grow at a compound annual rate above 40%, yet Photonics-SOI growth remains exposed to variables like copackaged optics adoption and transceiver speeds. The lowered target price relies on a sum-of-the-parts valuation, reducing the Photonics segment's FY29E EV/EBITDA multiple from 45x to 25x, while applying a 10x multiple to other segments. Downside risks include persistent weakness in mobile and automotive markets.
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