Infineon Technologies (ETR: IFX) shares gained 1.1% on Tuesday, extending the year-to-date rally to 105.6%, even as mwb Research downgraded the German chipmaker to Sell from Hold, arguing that the stock’s sharp re-rating has left the risk-reward profile firmly in negative territory.
In a note from analyst Abed Jarad, mwb Research acknowledged that Infineon’s fundamentals are clearly improving, with AI strength broadening into industrial recovery and early automotive stabilization.
The firm raised its price target to EUR 60.00 from EUR 58.00, but with shares now trading at EUR 77.55, that still implies a downside of well over 20%.
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mwb Research said the problem is not the operating backdrop but the valuation. “The broader chips trade has become crowded,” the firm said, with investor appetite for AI exposure and power semiconductor beneficiaries having “pushed valuations and multiples across the space materially higher.”
The firm believes further upside now depends on “continued positive revisions and sustained multiple expansion,” leaving little room for disappointment.
Among the positives mwb Research cited, the Power and Sensor Systems division continues to stand out as the key earnings engine, supported by AI power semiconductors and radar sensors, while the Green Industrial Power segment is seeing a visible cyclical recovery driven by power infrastructure and energy-efficiency demand.
Despite raising its estimates above consensus in both the short and long term, mwb Research concluded that “valuation and expectations have moved ahead of fundamentals,” making the downgrade to Sell appropriate given the inherent execution risks and cyclical nature of the business.
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