ams-OSRAM Undergoing A Painful Reset, But Better Days Should Lie Ahead

 Neither operating conditions nor sentiment have gotten much better for ams-OSRAM AG (OTCPK:AMSSY) (AMS.S) since my last update, with investors basically heading to the sidelines as the company absorbs the hit from reduced business at Apple (AAPL) and exiting low-margin legacy OSRAM businesses. While the OSRAM moves will improve long-term margins and ams is gaining business with Android OEMs (not to mention non-smartphone business), the reality is that the market isn't eager to buy in ahead of real evidence of those improvements.

That reality is why I was still lukewarm on the shares back in August, and the shares have fallen another 25% or so since then, underperforming the SOX index and individuals names like STMicro (STM) that I've liked better. I'm getting more intrigued by the "post-reset" potential of ams, though, and I think the upcoming capital markets day in early April could be an opportunity for management to set clear benchmarks and start shifting the tone on the shares. It's still early, and the risk of disappointment is high, but this is getting more and more interesting as a contrarian/overlooked turnaround play.

 

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ams-OSRAM Undergoing A Painful Reset, But Better Days Should Lie Ahead