Aixtron Downgraded At Kepler Cheuvreux On Guidance Risk, 'No Catalyst In Sight'

In a report published Thursday, Kepler Cheuvreux analyst Bernd Laux downgraded the rating on AIXTRON SE (ADR) (NASDAQ: AIXG) from Hold to Reduce, while reducing the price target from EUR7 to EUR5, saying that 2015 guidance was at risk.

Analyst Bernd Laux believes that Aixtron would report its 2Q results short of market expectations. "The recovery of the company's business continues to lack momentum, with its customers suffering from excess capacity and price erosion."

Laux expects the company to report sales of EUR45m, up 12 percent sequentially, but representing a 3 percent y/y decline. Aixtron is expected to report an EBIT loss of EUR11.5m, up 18 percent sequentially and 12 percent y/y, "reflecting continued under-utilisation and sequentially higher opex."

In the report Kepler Cheuvreux noted, "Taking into account lacklustre demand (e.g. depressed backlighting) and strong price erosion for LEDs (e.g. Cree warning), thus continued suboptimal loading, demand for the delivery of new MOCVD tools has remained behind original expectations. Hence, Aixtron's huge San'an order will most likely also be pushed out."

Consequently, Laux expects the company's full 2015 guidance of EUR230-250m in sales and a positive H2 2015 EBITDA as "increasingly likely to be missed."

The EPS estimates for 2015 and 2016 have been reduced by 23 percent to -EUR0.27 and by 41 percent to EUR0.10, respectively, significantly below the consensus expectations of -EUR0.15 and EUR0.17.