Melexis Managing the present and preparing the future
We updated our model (€ 70 Target Price and Buy rating reiterated) after 1Q25 sales were in line with expectations. Amid more volatile market conditions, Melexis remain fully focused on the things within its control, managing the present and preparing the future. Melexis 1H25 outlook is in line with expectations in spite of the recent weakening of the USD. Melexis expect that they will progressively convert the increased number of new products and design wins into sales.Due to the ongoing inventory correction, automotive and industrial chip companies like Melexis are currently under-shipping relative to their end-demand levels. This has led to temporarily depressed sales and gross margins. However, we expect their earnings to rebound into 2H25E and FY26E.
We also welcome to see Melexis' increased focus on China with China's growing importance.
Melexis designs, develops, tests and markets advanced integrated circuits primarily for the automotive industry. Co. sells its products to a wide customer base in the automotive, medical and industrial markets in Europe, Asia and North America. Co.'s main products are Hall effect ICs, Pressure and Acceleration Sensors, Sensor Interface ICs, Automotive Systems-on-a-Chip, Embedded Microcontrollers, Bus System Chips, Optical and Infrared sensors. In each case the products are primarily developed for automotive applications and designated lead customers with subsequent use in commercial and industrial applications.
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