Free Issue No. 10 of 07.05.2020
Our statements of 23 April 2020have already been confirmed: Theprice pressure has decreased massively and the share is working its way forward towards the price target of CHF 35! Visually, i.e. in francs and percentages, there still seems to be a long way to go.However, the first new price targets from analysts are also already within the range of our expectations.The chip manufacturer AMS is doing very well and even the Corona crisis does not seem to be affecting the company.The figures for the first quarter are very good and consistently exceed expectations. Sales increased by +28% to USD 501m compared to Q1 2019. The operating result at Ebit (earnings before interest and taxes) level was impressive; it increased to USD 101m or +330%. Last but not least, operating cash flow was also impressive at USD 235m or +151%.Only net income looks negative at first glance at minus USD 17 million.However, this figure was burdened by the one-off costs of the capital increase of around CHF 50 million.
All in all, a "green tick" can be placed under the first quarter of 2020. But what can be expected from the rest of the year? In this regard, too, the management provides a positive outlook. AMS can deliver, AMS is innovative in terms of new products and developments, and AMS is consistently following through with the acquisition of Osram.This is where the greatest uncertainties lie in the market and in most commentaries. In order to facilitate the integration, which is scheduled to take place in Q2 2020, AMS is seeking a domination and profit and loss transfer agreement. This would primarily help net debt. The stock is definitely undervalued.
AMS should tick up to at least CHF 25 to CHF 30 on its own, excluding the upcoming synergies. Our price target of CHF 35 is realistic!
