Melexis Model update after inventory correction at its automotive customers
We updated our model after Melexis indicated it sees more challenging end-market circumstances. It was not a surprise to us that Melexis revealed that recent discussions with customers indicate that they wish to reduce significantly their inventories by year-end, which Melexis has decided to assume. The market was -in our opinion- more worried that Melexis highlighted that -while the inventory correction at its automotive customers is temporary and global car production is projected to grow in 2025- visibility on next year is also limited today.Although 4Q24 will be impacted by the weaker end-market demand for cars that might further elevate excess chip inventory in the supply chain, we maintain our Accumulate rating with a, DCF-supported, Target Price of € 85.
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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