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Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL)'s recently filed 8-K and 10-Q firms led a Stifel analyst to turn bearish on the company's prospects.
The Analyst
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Analyst Tore Svanberg downgraded shares of Alpha and Omega Semiconductor from Hold to Sell and lowered the price target from $16 to $13.
The Thesis
Operational risks such as "worsening FCF headwinds" and reduced "balance sheet flexibility" have come to plague Alpha and Omega Semiconductor, Svanberg said in a Monday note.
The problem is fueled by the debt the company has taken on to finance capacity expansion requirements and an anticipated $25-million cash infusion into its China JV, the analyst said.
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Stifel projects that Alpha's cash balance will be $48.4 million by the first quarter of 2019, with likely debt levels of $47.8 million, Svanbverg said the company will cut down on its buyback program over the next nine to 12 months.
The company's risks have increased to the point of making underperformance likely over the next nine to 12 months, the analyst said.
The Price Action
Alpha and Omega Semiconductor shares have shed over 6 percent year-to-date. The stock was down 4.63 percent after the open Monday.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.