Alpha & Omega Semiconductor Receives Analyst Upgrade, Price Target Raised

Alpha & Omega Semiconductor Ltd (AOSL) has received a rating upgrade from Stifel to 'Hold' from 'Sell'. The analyst, Tore Svanberg, has also raised the price target to $25.00, up from $18.00, marking a 38.89% increase. The average target price from 3 analysts is $28.33 with a high estimate of $35.00 and a low estimate of $18.00, implying a 1.15% upside. The estimated GF Value in one year is $29.39, suggesting a 4.93% upside from the current price of $28.01.

Alpha & Omega Semiconductor Ltd (AOSL), a semiconductor manufacturer, has received a significant upgrade from Stifel, with its stock rating changed from 'Sell' to 'Hold'. The analyst, Tore Svanberg, has also increased the price target from $18.00 to $25.00, representing a 38.89% increase. This upgrade comes on the heels of the company's announcement of the sale of its China joint venture stake for $150 million in cash [1].

The transaction, valued at approximately $738.9 million, includes Alpha & Omega's 18.9% equity ownership, which is valued at roughly $139.7 million. The sale will reduce the book value of the joint venture by approximately $65 million, but it is expected to improve Alpha & Omega's pro forma net cash position to $7.50 per share from $3.89 per share. Stifel believes that the risk-reward profile for Alpha & Omega shares is now "relatively balanced" due to the improved balance sheet, reduced exposure to the competitive Chinese foundry market, and improved downside protection [1].

The new price target of $25.00 is based on an enterprise value to sales multiple of 0.9 times its calendar year 2026 sales estimate, which represents about 2.3 times the company’s pro forma net cash per share. The average target price from 3 analysts is $28.33, with a high estimate of $35.00 and a low estimate of $18.00, implying a 1.15% upside. The estimated GF Value in one year is $29.39, suggesting a 4.93% upside from the current price of $28.01 [2].

In other recent news, Alpha and Omega Semiconductor reported its Q3 FY2025 earnings, revealing a non-GAAP EPS of -$0.10, which fell short of the forecasted $0.0033. The company also reported revenue of $164.6 million, slightly below the expected $167.77 million. Despite the earnings miss, Alpha and Omega Semiconductor experienced a 9.7% year-over-year revenue increase, with notable growth in computing and power supply sectors [1].

The company has also announced an agreement to sell 20.3% of its joint venture in Chongqing, China, for $150 million in cash, expected to close by the end of 2025. Additionally, Alpha and Omega Semiconductor has reached a $4.25 million settlement with the U.S. Department of Commerce’s Bureau of Industry and Security over export control practices. The company also introduced a new 25V MOSFET featuring advanced packaging for data centers, highlighting its focus on high-power density applications [1].

Stifel analysts maintained a Sell rating on Alpha and Omega Semiconductor, citing limited near-term gross margin expansion despite a recent revenue beat. The company plans to use proceeds from the joint venture sale to invest in technology and research, aiming to expand its product portfolio [1].

Reference List:
[1] https://www.investing.com/news/analyst-ratings/alpha--omega-semiconductor-stock-rating-upgraded-by-stifel-on-china-jv-sale-93CH-4135525
[2] https://www.theglobeandmail.com/investing/markets/stocks/AOSL-Q/pressreleases/33409060/alpha-and-omega-sells-stake-in-cqjv-for-150m/