Robert W. Baird analyst Tristan Gerra has maintained their neutral stance on DIOD stock, giving a Hold rating on January 5.
Geoff Meacham has given his Hold rating due to a combination of factors affecting Diodes’ market position and future prospects. The company is currently navigating through a period of inventory rebalancing, particularly in the industrial and distribution sectors, which is not yet complete. Additionally, the automotive demand is showing variability and overall demand visibility remains low, particularly in China, which is contributing to increased orders with shorter lead times and pressure for lower pricing. Despite these challenges, there is a sentiment among customers anticipating a recovery in 2025, which could lead to renewed long-term supply agreements across the industry.
Diodes appears to be in a relatively strong position compared to its peers, thanks to its conservative approach to pricing over the past two years, a strategy of avoiding product pruning, and continuous improvement in its product mix. However, the process of optimizing fab loading and qualifying new manufacturing services is expected to extend beyond the initially projected two quarters. Additionally, Diodes is in the early stages of promoting Silicon Carbide (SiC) technology and is currently working with a limited customer base. The risks facing Diodes include managing excess wafer capacity, potential price compression in discrete products, and a highly competitive market environment. Despite these risks, the company’s gross margin profile is improving, and the demand outlook is strong, further supported by synergies from recent acquisitions.
In another report released on January 5, Truist Financial also downgraded the stock to a Hold with a $78.00 price target.
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Diodes (DIOD) Company Description:
Diodes, Inc. manufactures and supplies semiconductor products. It offers diodes, rectifiers, transistors, MOSFETs, protection devices, functional specific arrays, single gate, dual gate and standard logic, amplifiers and comparators, Hall-effect and temperature sensors. The firm operates through the following geographical segments: Asia, North America, and Europe. It also provides power management devices, including LED drivers, AC-DC and DC-DC switching, linear voltage regulators, and voltage references along with special function devices, such as USB power switches, load switches, voltage supervisors, and motor controllers. The company was founded on June 15, 1959 and is headquartered in Plano, TX.
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