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.
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