ams-OSRAM sinks 15% on lower-than-expected Q4 guidance

Investing.com -- ams-OSRAM (SIX:AMS) shares fell more than 15% on Tuesday after the Austrian semiconductor and lighting manufacturer issued fourth-quarter guidance that analysts described as “well below expectations,” overshadowing third-quarter results that were broadly in line with forecasts.

The company posted €853 million in third-quarter revenue, a 3% year-over-year decline but modestly ahead of market expectations. 

UBS said that revenue was 1% above consensus, while Kepler Cheuvreux said sales were “2% above our estimate and 1% above the consensus,” with like-for-like growth of 2%. 

Both analyst notes said the performance was supported by a one-off gain from the group’s disposal of its Singapore fabrication facility.

According to Kepler Cheuvreux, the semiconductor division grew 4% like-for-like in the quarter, supported by higher automotive demand and rebalanced inventory levels in the optoelectronic supply chain. 

Consumer revenue fell 3%, with the brokerage noting “the ramp-up of new sensor products, including the ambient light sensing coming back in iPhones from the 16 series.” 

Industrial and medical revenue declined 5%, reflecting subdued market conditions, while professional lighting performed well and horticulture reached its seasonal peak. 

Lamps and systems revenue decreased 2% like-for-like after easier year-earlier comparisons.

Adjusted EBITDA held steady at €166 million, and the margin rose to 19.5%. UBS noted the margin was “positively impacted by the sale of manufacturing assets in Singapore (not quantified).”

Kepler Cheuvreux said the margin was “up by 70bps YOY to 19.5%,” supported by the company’s cost-saving program, which reached an annualized run-rate of €185 million, up from €160 million in the second quarter.

Free cash flow came to €29 million in the quarter, according to Kepler Cheuvreux, compared with €134 million a year earlier, supported by €32 million of working-capital inflows and a 54% year-over-year reduction in capital expenditure to €46 million. 

UBS cited a free-cash-flow improvement to €43 million from a negative result in the previous quarter. Net debt stood at €1.581 billion, while net debt including sale-and-leaseback liabilities reached €2 billion.

The company’s fourth-quarter outlook diverged sharply from analyst expectations. ams-OSRAM projected 2% like-for-like sales growth at the midpoint, which Kepler Cheuvreux said was “3% below our estimate and 5% below the consensus.” 

UBS noted the company’s revenue range of €790 million to €890 million would represent a 2% quarter-to-quarter and 5% year-to-year decline at the midpoint. 

The adjusted EBITDA margin was guided “around 17.5%,” according to Kepler Cheuvreux, compared with its 21% estimate and the 19.6% consensus. UBS cited a margin range of 16% to 19%.

Kepler Cheuvreux wrote, “All in all, the adjusted EBITDA should bottom c. 20% below our estimate and 15% below the consensus in Q4.” 

UBS said the company’s expectation of more than €100 million in full-year free cash flow assumed “timely receipt of Chips Act funding.”

Kepler Cheuvreux maintained a "hold" rating and a CHF10.5 price target, citing limited medium- and long-term growth prospects and elevated leverage. UBS said the company’s guidance implied reductions to 2025 and potentially 2026 earnings assumptions.