Why Materion Shares Are Falling This Week

With orders coming in lower than expected, the advanced materials management company MATERIAL (MTRN 4.55%) sees a less profitable 2024 than originally expected. As a result, the company revised down its guidance for 2024, prompting investors to reduce — or exit — their positions entirely. Adding to investors’ concerns, one analyst gave a more bearish outlook on Materion shares during the week.

Materion shares fell 10.7% from the close of trading last Friday through Thursday’s market close, according to data from S&P Global Market Intelligence.

Sources of investor distress

In its 2024 Q2 financial report, Materion management expressed optimism for the year, projecting 2024 adjusted earnings per share (EPS) of $5.60 to $5.90 — the midpoint of which was a 2% increase from that reported in 2023.

But the optimistic outlook did not last long. On Tuesday, Materion disclosed in a regulatory filing that it is now guiding for 2024 adjusted EPS of $5.20 to $5.40 due to slower order intake in the second half of 2024 than previously expected. In response to the current environment, management noted that it “implemented additional cost control actions to mitigate the impact of lower value-added sales…”

Expecting less upside for Materion stock, Seaport Research cut its price target on the company’s stock to $135 from $150.

Is now the time to avoid Materion stock?

Despite the recent selloff, Materion shares still don’t look attractively priced, trading at 26.8 times trailing earnings. As a company with strong exposure to the semiconductor industry, those looking for comparable exposure may want to consider alternative opportunities instead of rushing to pick up Materion stock.