BE Semiconductor shares fall as HSBC sees downside risks by Investing.com

Investing.com — Shares of BE Semiconductor Industries (AS:) (BESI) fell on Monday after analysts at HSBC raised concerns about downside risks, initiating a “reduce” rating on the stock with a price target of 95 EUR, representing a potential Downside of 15.3% from the previous price of EUR 112.15 (as of September 18).

BE Semiconductor was trading down 3.2 percent at 6:53 am (1053 GMT) at €108.05.

This reflects HSBC’s caution about growth expectations for BESI, particularly around demand for its hybrid soldering tools, a key driver of the company’s future growth in semiconductor assembly equipment.

While BESI is well positioned in the semiconductor assembly market, particularly in hybrid bonding – a crucial technology for advanced semiconductor packaging – HSBC’s proprietary model suggests demand for these tools may be below expectations.

“It is likely to rise to about 150 tools by 2026 and about 480 tools by 2030, significantly below the company’s expectations for an installed base of 900-2,000 tools by 2030,” the analysts said. This discrepancy presents a potential risk of underperformance relative to market expectations.

HSBC also flagged concerns over BESI’s non-hybrid connectivity segments, which cater to industries such as automotive and mobile, comprising 59% of the company’s revenue in 2023.

Given the uncertainty regarding demand recovery in these markets, HSBC expects revenue growth in these segments to be more conservative than previously anticipated.

HSBC’s projections for BESI’s financial performance in 2025 are lower than market consensus. While the consensus estimates BESI’s revenues in 2025 to be €929 million, HSBC estimates that they will be around €779 million, representing a gap of 16%.

The brokerage also expects BESI’s net income for the same period to be 23% below consensus estimates. As a result, HSBC has set a price target of €95, implying a downside risk of 15.3%, supported by a valuation of 27 times FY26 estimated earnings, in line with the historical average P/E multiple of actions.