Melexis In rough weather, exaggeration only deepens the valley

Melexis enters 2026 with a message that is far from triumphant: the recovery is happening, but it remains “an uneven recovery”. 4Q25 delivered growth, yes—but only just—and once again China dictated the rhythm with swings that overshadow structural progress.


We updated our model taking into account management insists that FY26 will mark the start of margin improvement, and while the yield normalization story is credible, it does little to offset the uncomfortable reality of flat sales in 1Q and 1H. Seasonality, annual pricing resets, and shifting EV incentives are real factors—but they also highlight how dependent Melexis remains on external forces it cannot fully manage. When the company now frames stable 1H26 sales as an achievement, it becomes clear how much the demand cycle pick up has a delay.


Where Melexis still earns the benefit of the doubt is in innovation and design-win momentum. Nineteen product launches and a strengthening footprint in China and India are material positives. But these long-term drivers coexist with short-term fragility: customer transitions depress early-year demand, non-automotive revenues take a hit, and 2H recovery depends heavily on Chinese re-stocking. The opportunity is intact—but so are the risks.


We fine-tuned our model after the FY25 results and conference call and lowered our Target Price further to € 70 while maintaining our Accumulate because “If you lean too hard into the dips, you end up below the road”.