Advanced Energy Industries Needs To Reassure The Street And Rebuild Sales Momentum

 

Maybe the best thing I can say about Advanced Energy Industries’ (AEIS) performance since my last update is that it could have been worse. Down marginally, the shares have outperformed the weak NASDAQ, and haven’t done any worse than comps/rivals like Comet Holdings (COTN.SW), MKSI (MKSI), and VAT Group (OTCPK:VACNY), despite what I believe are valid ongoing concerns about market share loss.

It’s that possible market share loss that concerns me most. The supply chain issues that are hitting margins and preventing AEIS from shipping to demand are a problem, to be sure, but one that I believe will resolve over time. Fundamental share loss, though, is harder to deal with in the short term and is certainly more alarming when it comes to projecting future revenue and profit growth.

I don’t believe my long-term growth assumptions are overly bullish (mid-single-digit revenue growth and modest margin improvement), but management has some work to do here to reestablish AEIS’s credentials as the leader in its space and a go-to name in the semi-equipment space. I’m still bullish on balance, but this is definitely a “Buy” with an asterisk and a name really only suited to more adventurous investors.

 

Read the full article here: 

Advanced Energy Industries Needs To Reassure The Street And Rebuild Sales Momentum

Supply Challenges May Not Explain All Of Advanced Energy Industries' Weakness

 

Despite strong demand for semiconductor equipment, recovering demand for a range of industrial and medical products, and ongoing investments in data centers, Advanced Energy Industries (AEIS) has been performing rather poorly. I’ll get to the financials in a moment, but the stock has lost another 20% or so in value since my last update, significantly underperforming comparables like Comet Holdings (COTN.S) and VAT Group (OTCPK:VACNY), as well as Delta Electronics.

While component shortages and supply chain issues may explain some of the challenges at AEIS, rivals don’t seem as bothered, raising the question of whether AEIS is losing share and losing momentum in its core businesses. It may be premature to question the company’s ability to participate in the strong semi equipment growth cycle, but the market is clearly out of patience and while the shares do look undervalued today, management needs to get the business back on track.

 

Read more here: 

Supply Challenges May Not Explain All Of Advanced Energy Industries' Weakness

Advanced Energy Industries: Temporary Supply Challenges Don't Hurt The Long-Term Case

 

Severe supply constraints for semiconductors and other electronic components claimed another victim with Advanced Energy Industries’ (AEIS) second quarter guidance, sending the shares down 10% in response. Although the shares have recovered some lost ground, they’re still down a bit from the time of my last update and have underperformed peers like MKS Instruments (MKSI), Comet Holdings (COTN.SW), and Delta Electronics (OTC:DLEGF).

On a core level, I’m not too troubled by these supply-related disruptions to the business. The Semiconductor business remains in very strong shape with respect to market share, backlog, and capacity growth, and I expect improving demand in the Industrial segment through 2021. I still expect AEIS to generate long-term revenue growth of around 5% to 6% and FCF growth in the high single-digits, and at today’s price those growth rates support a double-digit annualized prospective rate of return.

 

Follow this link to the full article: 

Advanced Energy Industries: Temporary Supply Challenges Don't Hurt The Long-Term Case

Advanced Energy Industries Shares Still Offer Upside

Though down about 15% from a recent high, Advanced Energy Industries (AEIS) shares have done pretty well since my last update, rising more than 70%. That performance is better than peers/comps like Delta Electronics and Comet, in line with Lam Research (NASDAQ:LRCX), and short of the exceptional run at Applied Materials (AMAT), another major customer.

I believe the recent share price weakness is likely tied to a combination of mixed guidance (“only” in line with sell-side expectations) and the unexpected announcement of the retirement of CEO Yuval Wasserman after a six-and-a-half year run at the company that saw not only significant stock price appreciation (up around 470%), but also significant transformation into a company that is now a much more diversified industrial tech player (focused on power supplies) rather than a semiconductor subsystem supplier.

Wasserman will be missed, but went to some pains to clarify that his departure was in part tied to finding a good successor (Steve Kelley, former CEO of Amkor (AMKR)) and that there was no urgency or rush to the door. With a strong line-up across multiple growth markets, I expect AEIS to generate healthy mid-single-digit long-term revenue growth and stronger, more stable margins. All of this supports a fair value above today’s price.

 

Click this link for the full article: 

Advanced Energy Industries Shares Still Offer Upside

With Healthy End-Markets, Advanced Energy Industries Looks Too Cheap

The market teaches you to be paranoid - if something looks too cheap, it pays to investigate further to see what you might be missing. In the case of Advanced Energy Industries (AEIS), I can understand if investors are worried about the recovery trajectory of the industrial business and perhaps that the data center business could slow, but the core semiconductor business looks strong into 2021 and I think both data center and wireless will see good results in the coming quarters.

AEIS's exposure to semiconductor equipment manufacturers virtually guarantees cyclicality in the results, and data center and wireless spending has likewise been volatile (on an over sector basis) for some time. Plus there is the integration risk from the Artesyn deal - past attempts to venture outside of semiconductor equipment have not gone well for the company. Still, even factoring in those risks, I struggle to see why Advanced Energy Industries should be priced for low-to-mid teens long-term annualized returns and trading about halfway between its 52-week high and low when its major customers aren't nearly so weak.

 

Read more here: 

With Healthy End-Markets, Advanced Energy Industries Looks Too Cheap

A More Diverse Advanced Energy Is Looking At Multiple End-Market Drivers

The cyclicality of the semiconductor industry is a challenge for all equipment suppliers. Advanced Energy Industries (AEIS) has tried to offset and mitigate that cyclicality by deploying capital into diversification efforts. These efforts haven’t really worked so well historically; the solar inverter business was a small-scale disaster, and the other acquisitions haven’t really done all that much. Now management is hoping that its biggest-ever deal will change that, with the Artesyn acquisition giving the company exposure to near-term growth trends in 5G and data center and long-term opportunities in med-tech and industrial.

Advanced Energy has done well since my last update, rising close to 40% as the stock has followed other semiconductor suppliers higher since the fall. I was bullish on the stock then, but modeling has gotten a lot more challenging with the addition of Artesyn, and AEIS management guidance suggests a less robust margin/cash flow recovery from the semiconductor business than in past cycles (or Artesyn margins are going to really weak). Unlike many semiconductor equipment stocks, I don’t think the shares look all that expensive, but I want to emphasize the higher level of modeling uncertainty.

Click here for more:
A More Diverse Advanced Energy Is Looking At Multiple End-Market Drivers

Advanced Energy Industries Takes A Hit As The Semiconductor Cycle Is Still Sorting Itself Out

I believe Advanced Energy Industries (AEIS) highlights at least some of the risks I've seen in the rally in semiconductor and semiconductor equipment names. Even though the year-to-date performance is still strong (up about 18% as of this writing), the shares have come down about 15% off a recent peak on a combination of weaker first quarter results and guidance, as the market isn't seeing the quick, sharp recovery that investors want to believe is going to happen.

Another weak quarter (or two) remains in play as a risk factor, but I think these shares hold some appeal for more risk-tolerant investors. I don't see any real sign that AEIS is losing traction with its two largest customers (Applied Materials (AMAT) and Lam Research (LRCX)), and I think the long-term outlook and realities of the semiconductor market mean good long-term demand for chip-making equipment and AEIS's components.

Follow this link for more:
Advanced Energy Industries Takes A Hit As The Semiconductor Cycle Is Still Sorting Itself Out

AEIS Powered Down For Now, But Still Undervalued On An Eventual Semiconductor Recovery

Down a little bit from my last write-up (during which time the stock swooned another 25% only to regain most of that), Advanced Energy Industries (AEIS) is a tempting target in a sector undergoing serious pressure and downward revisions as semiconductor companies, particularly in the memory space, slash their capex budgets and semiconductor equipment companies cut their orders for critical components like power supplies, matchboxes, and plasma generators.

This year (2019) is likely to be ugly, and I’m not ruling out the possibility of another round (or two) of guidance revision, but at some point the sector will bottom out, and I think AEIS’s leadership in power subsystems is worth more than the share price currently reflects and I think management has the capability to do something a little more dramatic on the capital allocation side.

Continue here:
AEIS Powered Down For Now, But Still Undervalued On An Eventual Semiconductor Recovery

As The Market Gets More Fearful About VAT Group, It's Tempting To Get Greedy

”Be fearful when others are greedy, and greedy when others are fearful.” - Warren Buffett

The Street’s unbridled love affair with semi-equipment stocks looks to be over, with investors increasingly worried about the prospect for equipment order push-outs and a general slowdown later in 2018 and into 2019, and perhaps an actual short-term contraction. That’s not great news for Switzerland’s VAT Group (OTCPK:VACNY) (VACN.S), as this leading provider of vacuum valves depends upon a strong semiconductor and display equipment order environment for its own growth.

I do believe there is sufficient evidence to support the idea that 2019 will be a much more challenging year, and there’s really not much visibility at this point. That’s a dangerous set-up, and buying equipment stocks going into a slowdown is often a painful (or at least frustrating) experience. But then, VAT is a significantly above-average equipment provider, and getting too cute about waiting for the ideal entry point could mean never owning the shares.

Investors should note that VAT Group’s ADRs are not very liquid; the local shares are considerably more liquid, but that may not be an option for all investors.

Read more here:
As The Market Gets More Fearful About VAT Group, It's Tempting To Get Greedy

Advanced Energy Industries Closer To The Edge

Everybody has probably seen at least one video of a person (usually a male between the ages of 15 and 40) running full-speed at some sort of barrier that the runner assumes is lightweight and/or will be easily passed through… only to discover too late (typically upon regaining consciousness) that it was actually quite solid.

I mention that as an opening to the dilemma facing Advanced Energy Industries (AEIS) investors right now. Based upon what major customers like Applied Materials (AMAT) and Lam Research (LRCX) are saying, it looks pretty likely that semiconductor equipment demand growth will slow noticeably in 2019 - but is this a "lightweight" barrier that is just a dip in a long-term growth trajectory driven by new architectures and strong demand for IoT and memory or is the industry looking at a hard stop and a return to the "normal" cyclicality of past eras?

I'm cautiously optimistic that it is more the former than the latter, and it doesn't take hefty growth assumptions to drive a worthwhile fair value here. I advised caution on AEIS back in mid-February and the shares are down slightly since then (peers like MKS Instruments (MKSI) and Comet (OTC:CHLDF) (COTN.S) have done similar-to-worse, while XP Power (OTCPK:XPPLF) (XPP.L) has done better). I think this is still a risky call - buying tech into a slowing growth cycle is tough way to make money - but it's hard to ignore a well-run company with growing end-markets (on a long-term basis) and an interesting valuation.

Click here to continue:
Advanced Energy Industries Closer To The Edge

Advanced Energy Industries Continues To Reap The Benefits Of The Semi Cycle

Every once in a while, you see things that make you double-check and triple-check what you're looking at, and Advanced Energy Industries ("AEIS") (AEIS) is a case in point. This manufacturer of key components used in semiconductor manufacturing and a variety of other specialized manufacturing processes has continued to rack up excellent, better-than-expected results. And the shares are … down about 10% from when I last wrote about the company?

Over that same period, a grab-bag of other companies with exposures to many of the same primary markets (including Applied Materials (AMAT), MKS Instruments (MKSI), and Orbotech (ORBK)) are up anywhere from 30% to 60%. Although I thought AEIS was priced pretty richly back at the time of that last update, I'm a little surprised the strong reported financial performance hasn't kept the stock price stronger.

That's not to say that I think AEIS is cheap today. I think there's a "hey, it's not quite as expensive as some other ideas in the space" relative valuation argument, but the expectations that seem factored into the price today are still pretty healthy. That said, if AEIS can continue to leverage the ongoing investments in leading-edge semiconductor capacity and post strong numbers, it won't surprise me if the sell-side starts making "buy this laggard" calls.

Continue here:
Advanced Energy Industries Continues To Reap The Benefits Of The Semi Cycle

The Good Times Get Better For Advanced Energy Industries

I last wrote about Advanced Energy Industries (NASDAQ:AEIS) in September and said, "I don't think the semi-cap cycle has peaked, so growth/momentum investors may still find more room to run with Advanced Energy." The shares have shot up another 60% since then, outperforming other semiconductor equipment stocks I've liked, including MKS Instruments (NASDAQ:MKSI).

This performance hasn't been just hype and hope, as Advanced Energy has been outperforming its own guidance and seeing solid evidence that opportunities tied to new chip architectures, advanced packaging, and non-chip markets like OLEDs are converting to actual orders and revenue. Bulls may argue that these drivers will lead to a substantially greater addressable market and a longer up-cycle, and I don't necessarily disagree.

Likewise, Advanced Energy has plenty of room to grow outside of its core semiconductor market(s). All of that said, I can't make a quantitative value argument here, so these shares really only seem appropriate for investors who want to take on the risk that the good times can still get meaningfully better before valuations come back to a lower orbit.

Read more here:
The Good Times Get Better For Advanced Energy Industries

MKS Instruments Leveraging Its Strengths And Pursuing New Opportunities

In a relatively expensive market, I don't expect to find many bargains and such is the case with MKS Instruments (NASDAQ:MKSI). That said, this manufacturer of components and subsystems for the semiconductor equipment industry doesn't look overly expensive and management has a good recent track record with respect to revenue and margin performance versus sell-side expectations.

The unpredictability of the semiconductor equipment cycle is basically a permanent risk factor, but the acquisition and integration of Newport should expand the company's opportunities within its core semiconductor market, as well as deliver new opportunities outside this notoriously cyclical sector.

Read more here:
MKS Instruments Leveraging Its Strengths And Pursuing New Opportunities

Advanced Semiconductor Needs Driving Advanced Energy Industries

This has been a good year for smaller providers of capital equipment to the semiconductor industry, with names like Brooks (NASDAQ:BRKS), Ultratech (NASDAQ:UTEK), Rudolph (NASDAQ:RTEC), MKS (NASDAQ:MKSI) and Orbotech (NASDAQ:ORBK) up around 20% to 30%. Advanced Energy Industries (NASDAQ:AEIS) has left them in the dust, though, as this company has seen its share price improve almost 60% year to date, and over 75% over the past year. Better still, this isn't just sizzle and hot air - orders for upgrades and expansions tied to new 3D chip architectures are driving real, honest-to-goodness growth in the semiconductor business and solid margins as well.

How much further can it go? Semi cap equipment is even more cyclical than semiconductors, and the stocks tend to overshoot (sometimes wildly) both to the good and to the bad). I like the prospects for design wins extending AEIS's run of semiconductor growth, just as I like the prospects for advanced 3D architectures to expand the market. I'm also bullish on the potential of markets/end-users like OLEDs proving to be larger than currently expected.

The "but" is that a lot of this is already in the share price. Valuations have moved up pretty significant from January/February of this year, and AEIS's valuation already assumes pretty meaningful improvement in revenue and EBITDA margins. While I'm not ruling out the possibility that continuing outperformance will drive higher estimates, this looks more like a growth/momentum/cyclical recovery story than any sort of value play today.

Read the full article here:
Advanced Semiconductor Needs Driving Advanced Energy Industries

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.

Continue here:
AEIS Starts Its New Life

Seeking Alpha: Advanced Energy Industries Looking For A New Start

The angst over the health/trajectory of semiconductor capital equipment orders hasn't hurt Advanced Energy Industries (NASDAQ:AEIS) any more (or any less) than most of its peers. Applied Materials (NASDAQ:AMAT) has been noticeably weak since my February piece on AEIS, due to the fallout of its aborted merger with TEL, but AEIS, MKS Instruments (NASDAQ:MKSI), Entegris (NASDAQ:ENTG), Lam Research (NASDAQ:LRCX) and ASML (NASDAQ:ASML) have all clustered around low-to-mid single-digit loses over that span.

Given how tied Advanced Energy Industries is, and will be, to the semiconductor industry, that's not an unreasonable performance. The company has a good track record and reputation in supplying the semi equipment market with power conversion systems, remote plasma sources, thermal instrumentation, and so on, but the fact remains that major equipment buyers like TSMC (NYSE:TSM) and Intel (NASDAQ:INTC) have generally been buying less than expected and guiding down with respect to their plans as development timelines stretch out and the fabs reuse older equipment to save money.

Looking ahead, I believe AEIS is making the right decision in cutting its losses in the inverter business. Likewise, I think management is on the right track in looking to expand its precision power business beyond the semiconductor industry and into areas like medical devices and aerospace/defense. The "new" AEIS will likely emerge as a better, more profitable company, but the current valuation seems to largely reflect that.

Continue here:
Advanced Energy Industries Looking For A New Start

Seeking Alpha: Advanced Energy Industries Powering Up

About nine months ago, I thought that Advanced Energy Industries (NASDAQ:AEIS) had been sold down to an interesting value level as the potential of the company's precision power supply business was being overshadowed by growing worries about the solar inverter business. Since then, AEIS has seen significant management turnover and improving demand from semi customers and announced its intention to find new options for the inverter business; all of which has helped fuel a roughly 60% rise in the shares.

Valuation on AEIS shares isn't so compelling now, though there is near-term upside potential from front-end semiconductor equipment demand (particularly for advanced architectures) and longer-term potential from the company's diversification into adjacent end markets and product markets like high-voltage. Finding an honorable exit from the inverter business would be an incremental positive as well.

Read more here:
Advanced Energy Industries Powering Up

Seeking Alpha: Advanced Energy Industries Steps Back On Softer Demand

Advanced Energy Industries' (AEIS) first-quarter results reflect at least some of the reasons why I wasn't too eager to overpay for the stock back in early February. While AEIS has good technology and products for both the semiconductor equipment and solar industries, these are volatile businesses, and demand/orders for semi equipment in particular has proven to be quite volatile this year. The company has a lot of work left to do in bringing the solar inverter business to profitability, but the nearly 50% haircut since late February does have this stock at a more interesting level.

Please follow this link for more:
Advanced Energy Industries Steps Back On Softer Demand

Seeking Alpha: After A Strong Run, Advanced Energy Industries Still Controversial

A strong market-beating run over the past year hasn't done much to resolve the arguments about Advanced Energy Industries (AEIS). Depending upon which sell-side analysts you follow, AEIS is either a deeply cyclical supplier to the semiconductor industry or an emerging growth story in solar power. As is often the case, the truth probably lies in between - the inverter business at AEIS has some very legitimate growth potential as solar power markets develop, but it will be a while before the growth of solar and the non-semiconductor applications for the thin films business can offset the inherent cyclicality of semiconductor capital equipment.

I'm not as bullish on AEIS now as I was in my September write-up, but that's almost solely because the nearly 50% move in the meantime has taken the significant undervaluation out of the stock. I'm still bullish on the company on balance, and very interested to see what the company can accomplish in terms of new market opportunities for thin films. I'd need a pullback into the low $20's to get really excited about the shares again, but I'd be in no rush to sell if I already held them.

Click this link for more:
After A Strong Run, Advanced Energy Industries Still Controversial

Seeking Alpha: AEIS Offering A Semi Rebound And A Long-Term Solar Kicker

There are two ways you can look at Advanced Energy Industries (AEIS) - it's an up-and-coming leader in solar power inverters with a cyclical semiconductor equipment business attached, or it's a leading supplier of power conversion and thermal instrumentation products to the semiconductor industry with a growing (but intermittently profitable) solar business attached. Either way, I believe AEIS is still an undervalued tech stock with a clean balance sheet and multiple potential growth drivers in the coming years.

Please read more here:
AEIS Offering A Semi Rebound And A Long-Term Solar Kicker