Some are constantly firing "live" ammunition or just a lot of warm air against the chip and lighting company AMS OSRAM. Others, including ourselves, focus on facts and qualitative perspectives. As usual, the ZKB recently published an excellent and extremely detailed study. The bottom line is that the investment case clearly supports our long-held opinion... unfortunately, the share prices (still) speak a different language, not least because of the outlook for the fourth quarter of 2021. First things first: For the third quarter, AMS OSRAM made more revenue and profit than most analysts expected. Sales rose +6% to USD 1.52 billion, while operating profit (EBIT) adjusted for special items improved to USD 157 million, up from USD 63 million a year ago. However, this does not include the costs of the OSRAM acquisition, its integration and other expenses. Adjusted for these costs, AMS OSRAM posted an operating profit of USD 97 million, compared with an operating loss of USD 94 million in the previous year. The bottom line is a loss of USD 48 million, compared with a deficit of around USD 144 million in the same quarter of the previous year, which is also a pleasing improvement! It is obvious that AMS OSRAM also has to contend with supply bottlenecks, and this is the primary reason for the forecast "skid marks" for the current final quarter. Attempts are being made to make up for some of this with price increases.
Despite all the prophecies of doom, the combined group has a strong market position, whether in optical system solutions for automobiles, smartphones or industrial applications. AMS is a leader in most relevant technologies for 3D sensor solutions and optical modules. OSRAM is the leader in light sources and the clear number 1 in the automotive market. Many of these markets are growing rapidly in the coming years. The stock is undervalued. We are sticking to our price target of CHF 26!
