Aehr Test Systems (AEHR.US), which manufactures and tests semiconductors used, among other things, in the electric car market, has revised its 2024 forecasts downward for the second time in a year. The company's YoY growth rate will be 0% versus the impressive 50% expected in early fall 2023. Aehr expects an unexpected loss per share in its estimated results for the fiscal third quarter ended February 29, 2024. As a result, yesterday the shares of the company, which were still trading at $50 in November 2023, plunged 22% and are trading almost 1% higher in the pre-market today at $11.3 per share.
The cause of the problems? EV again
- Weakness in orders from the EV sector has already caused Aehr Test to issue disappointing forecasts once. The market read the company's announcement yesterday as a red flag, indicating that the situation is far from stabilizing. At the same time, the company had previously relayed that it expected its revenues and profits from other sectors including green energy and data centers to offset weakness in the electric market - but this is not happening;
- Aehr attributes the ongoing slowdown to delayed orders for wafer-burning systems, particularly semiconductors for electric vehicles. The company expects revenues of about $7.6 million, with a GAAP net loss of $1.5 million to $1.8 million ($0.05 to $0.06 per share). At the same time, bookings reached $24.5 million, and the company reported an order backlog of $20 million as of February 29, 2024;
- The manufacturer revised its annual revenue forecast for fiscal 2024 (ending May 31, 2024). The company forecasts total revenues of at least $65 million, with GAAP net income of about $11 million or ($0.38 per share versus $0.72 market forecasts). Gayn Erickson, Aehr's chairman and CEO, pointed to a general weakening of semiconductor investments, excess inventory and customer order deferrals. At the same time, the CEO is optimistic about long-term growth in the test and wafer burn-in market in the company's key markets: EV, renewable energy and data storage;
- Full results will be released on April 9, 2024, and the company will also hold a conference call at that time). Analysts at William Blair maintained a 'market perform' rating for the company.
Aehr Test (AEHR.US) shares, D1
The company's shares have experienced a much deeper sell-off than in the 2021 - 2022 cycle and are trading 45% below the 71.6 Fibonacci retracement and nearly 65% below the SMA200 average. The key resistance is the SMA50 average (orange line), which currently runs around $16 per share. The company has no debt and is experiencing high margins during a period of higher orders, and seems likely to benefit in a future scenario of another demand cycle in the EV market.
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