- Needham analyst Rajvindra Gill offered his bullish take on two semiconductor stocks.
- Gill reiterated a Buy on Magnachip Semiconductor Corp MX and a price target of $22.
- 2022 has plagued Magnachip with several issues, he acknowledged.
- Firstly, supply chain shortages have impacted the company for several quarters.
- Secondly, inventory building at distributor and retail levels is causing temporary order cuts at the large Korean customer.
- Thirdly, the new Chinese customer modified their design, pushing production back towards the end of 4Q22.
- These headwinds will likely reverse in 2023, and he is confident the OLED business could more than double off CY22E's low base.
- He saw four drivers for the steep ramp. They included a 2-4x wafer supply increase from the new second source, increasing supply from the primary existing source, ramping designs with Samsung Display, and full OLED DDIC production with the Chinese panel maker.
- Gill reiterated a Buy on Velodyne Lidar, Inc VLDR and a $3 PT.
- He noted that Velodyne reported a slight beat on the top line but guided a more significant miss with revenue declining sequentially.
- The company continues to be impacted by supply constraints while planned cost reductions take time, he added.
- Further, the management sees demand remaining strong, citing increasing backlog and billings up Q/Q.
- With ~$230 million in cash on the balance sheet, he estimates that the company has enough runway to complete its cost transitions and capitalize on the growing catalog of design wins.
- Price Action: MX shares traded lower by 14.79% at $12.10 on the last check Tuesday.
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