UBS has downgraded Rohm Co Ltd. from Buy to Neutral and lowered the price target from JPY2,700.00 to JPY1,500.00 due to challenges in the automotive and industrial semiconductor sectors.
The slowdown in the electric vehicle market and increased competition in the power semiconductor industry are concerns for Rohm's future performance. The semiconductor sector is facing high inventory levels and soft demand, particularly in automotive and industrial applications. While there are signs that the downward revisions may be ending, the challenges for companies like Rohm are significant.
The Silicon Carbide market, which Rohm focuses on, is becoming more precarious due to the EV sector slowdown and competition from European, American, and Chinese firms.
Despite these challenges, Rohm's stock valuation is relatively attractive, trading at a low price-to-book ratio. Recent performance data shows a significant decline in Rohm's stock, aligning with the challenges faced by the semiconductor sector. However, Rohm has maintained consistent dividend payments for 33 consecutive years, indicating financial stability.
The stock is currently trading near its 52-week low and has a low price-to-book ratio, suggesting it is relatively inexpensive. Rohm's commitment to dividend payments reflects a resilient business model. As the semiconductor industry evolves, companies like Rohm will need to navigate a complex landscape of competition and shifting market dynamics.