Tuesday, February 9, 2016

Seeking Alpha: AEIS Starts Its New Life

With the wind-down of the solar inverter business now complete, Advanced Energy Industries (NASDAQ:AEIS) is free to refocus itself around its expertise in power conversion and control systems. That's a pretty good business in its own right, and one capable of supporting operating margins in the mid-20%'s, but the real deciding factor for this company and stock will likely be the extent to which management succeeds in branching out from its historical reliance on the semiconductor industry.

What happens next in the semiconductor capital equipment space is anybody's guess, as major fab operators like Taiwan Semiconductor (NYSE:TSM), Intel (NASDAQ:INTC), and Samsung have generally been spending less than expected (or maybe "hoped") during this transition to next-gen architectures. While the cyclicality of its core semiconductor market will create volatility in reported results, I believe that mid-single digit growth can nevertheless support a fair value in the neighborhood of $29 to $30 per share for this stock.

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AEIS Starts Its New Life

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