Vishay Precision Faces Headwinds as Q2 Guidance Misses Expectations

Vishay Precision Group (VPG) has delivered another quarter of disappointing results, with its Q2 2025 revenue guidance falling short of Wall Street expectations and profitability pressures intensifying. The company’s struggles reflect broader challenges in its industrial and automotive markets, even as management points to strategic opportunities in emerging technologies.

Revenue Miss Signals Ongoing Weakness

Vishay’s Q2 2025 revenue guidance of $70 million to $76 million (midpoint: $73 million) marked a 3.6% shortfall against the consensus estimate of $75.71 million. This decline comes amid a year-over-year revenue drop of 9.6%, extending a trend that began in Q1 2025, when the company reported an 11.2% revenue decline. Analysts had hoped for stabilization, but Vishay’s cautious outlook suggests weakness persists in key segments like automotive and industrial equipment.

Profitability Under Pressure

While Vishay did not provide explicit Q2 EPS guidance, its Q1 2025 results offer a warning sign: the company reported an adjusted EPS of $0.04, a 42.9% miss relative to the $0.07 consensus estimate. Analysts project a similar shortfall for Q2, given the revenue outlook and ongoing margin pressures. The Q1 operating margin turned negative (-0.1%), a stark contrast to the 8.6% margin in Q2 2024. Management cited higher fixed costs, unfavorable currency fluctuations, and lower production volumes as key culprits.

Mixed Signals in Operations

Despite the financial struggles, Vishay highlighted a 2.7% sequential increase in orders and a book-to-bill ratio of 1.04, indicating improving demand for its sensors and measurement systems. CEO Ziv Shoshani emphasized progress in humanoid robotics and advanced manufacturing applications, which he called “strategic growth areas.” However, these positives were overshadowed by macroeconomic risks, including trade policy volatility and weak global industrial demand.

Peer Performance and Valuation Outlook

Vishay’s challenges stand in stark contrast to competitors like Bel Fuse (BES) and Advanced Energy (AEIS), which reported 18.9% and 23.6% year-over-year revenue growth, respectively, in Q1 2025. Vishay’s stock rose 28.8% in the month before its Q2 outlook, driven by hopes of a turnaround. Yet its trailing 12-month EPS estimate of $0.57—up 112% from Q1’s $0.04—remains far below sector averages. Analysts’ average price target of $29.25 (vs. a current price of $26.28) reflects cautious optimism.

Risks and Path Forward

The company faces two critical hurdles: cost discipline and revenue recovery. While Vishay has implemented cost-reduction programs, gross margins in key segments like Sensors and Measurement Systems continue to erode due to low volumes and unfavorable product mixes. Management’s focus on emerging markets, such as automated manufacturing and robotics, could unlock growth, but execution remains uncertain.

Conclusion: Caution Warranted Amid Mixed Signals

Vishay’s Q2 outlook underscores its battle against macroeconomic headwinds and operational inefficiencies. With a 9.6% year-over-year revenue decline and a negative operating margin, the company’s path to profitability hinges on stabilizing demand and improving cost controls. While strategic bets on robotics and advanced manufacturing offer long-term promise, near-term risks—including trade policy uncertainty and weak industrial spending—could keep pressure on the stock.

Investors should weigh Vishay’s valuation against its peers: at a current price of $26.28, the stock trades below its average price target but remains vulnerable to further margin deterioration. Unless Q2 results show a meaningful rebound in both revenue and margins, Vishay’s recovery narrative may remain unconvincing to the market.