This has been a tougher-than-expected year for Materion (
NYSE:MTRN).
While the company has seen strong demand in key core markets like
semiconductors, industrial, aerospace, and energy, multiple margin
headwinds have worked against the company, depressing reported profits
and cash
flows and leading to
negative estimate revisions. The third quarter in particular was rough
for sentiment, with a sharp drop pushing the shares down almost 10%
since my last update – underperforming Johnson Matthey (OTCPK:JMPLY), but outperforming the semiconductor market that drives a substantial part of the business. The
margin challenges are disappointing, but not unsurmountable, and I
think the share price has already paid the price for the reset of
expectations. I do have some concerns about weaker semiconductor volumes
in 2023, but I believe heavy industry, oil/gas, and aerospace should
remain healthy. I’ve decided to take a more conservative “show me”
stance on longer-term margin improvement, but even with those revisions,
high single-digit growth can support a higher price for the shares.
Continue reading here:
Margin Challenges And End-Market Worries Overshadowing Good Growth At Materion
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