On Friday, Deutsche Bank (ETR:DBKGn) adjusted its stock price target on Navitas Semiconductor (NASDAQ: NVTS) to $9 from the previous $10, while keeping a Buy rating on the stock. The firm acknowledged Navitas' consistent performance, citing that the company surpassed the upper end of its forecast for the fourth consecutive quarter.
In the fourth quarter of 2023, Navitas reported revenues of $26.1 million, a 19% increase from the previous quarter, which outpaced Deutsche Bank's estimate of a 17% quarterly rise. This surge in revenue allowed Navitas to achieve its objective of doubling its revenues in 2023, with a total annual increase of 109% compared to the previous year.
Navitas experienced robust sales growth across a broad range of products, including Gallium Nitride (GaN) and Silicon Carbide (SiC), with the mobile sector leading the way. However, the company has projected a downturn in its first-quarter 2024 revenues, anticipating a 12% quarter-over-quarter decrease, which contrasts with Deutsche Bank's initial forecast of a flat quarter.
This expected decline is attributed to seasonal patterns and broader economic challenges that are also affecting Navitas' industry counterparts.
Despite the anticipated short-term challenges, Navitas has outlined a persuasive plan for growth in the second half of 2024. The company expects to mitigate the impact of macroeconomic obstacles and capitalize on a series of design wins that are gaining market share in various segments, including mobile, appliances, automotive/electric vehicles, and data centers.
Deutsche Bank expressed confidence in Navitas' ability to navigate through the prevailing cyclical uncertainties with strong execution.
Looking ahead, Deutsche Bank projects that Navitas will grow significantly by approximately 44% in the calendar year 2024, maintaining a positive outlook on the company's year-over-year growth into 2024 and beyond.
Still, the firm has adopted a more cautious stance in its forecasts, reducing the expected revenue growth rate from roughly 80% to approximately 44% for the year 2024. This revised expectation has led to a slight decrease in the price target to $9, reflecting the adjusted revenue estimates.
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