DE40: Infineon drops amid industrial chips slowdown. Sartorius loses 16% after earnings

• Sentiments on DAX are weak compared to other EU indices. DE40 futures drops slightly
• Sartorius (SRT.DE) missed EBITDA expectations, shares loses 16% amid investors panic 
• Infineon (IFX.DE) loses almost 2.5% amid sales cut risk after TSMC earnings report

Today sentiments on stock market are relatively good, however reaction to TSMC results on US premarket suggest possible profit-taking despite good report from AI chips giant. European indices await the Wall Street open, and it's still possible that sentiments on Nasdaq100 will affect the further move on Germany futures. As for now, Morgan Stanley analysts see more dollar strength short-term vs. the Euro and Yuan, which (amid rising yields) still may affect equity premium however ECB rate cuts in summer are very high probable, which may have positive influence on the Germany stock market, if recession will not spread out.

DE40 (M30 interval)

DAX futures try to consolidate near 17.980 points after a dynamic sell-off, but until now volume indicates still higher sellers' activity. The first important zone for short-term trend reversal for buyers is 18.060 and 18.150 points where we can see important price reactions, trend line and 23.6 Fibonacci retracement of the downward wave from late-April.

Source: xStation5

Sartorius - further business slowdown

One of the biggest European biotechnology supplier, Sartorius (SRT.DE) reported earnings results for the Q1 with sales of EUR 666.9 million compared to EUR 726.1 million a year ago. Net income was almost 50% lower YoY EUR 56.1 million compared to EUR 111.1 in the Q1 2023. Diluted earnings per share came in EUR 0.58 vs EUR 1.21 in Q1 2023. Margin before interest, taxes, depreciation and amortization fell from 30.1 to 28.6% in Q1.

• The company said that, customer are continuing to reduce their inventories, however, the process is at an advanced stage in the core company business with consumables. Sartorius is observing a pronounced reluctance to invest among customers (China, Europe). Company CEO, Kreuzburg confirmed previous moderate expectations for H1 2024, but sees 'increasing business momentum' during the course of the year.
• Stock market is not sure about it today and sell company shares, as Sartorius presented incoming orders (adjusted for exchange rate effects rose) by just under 10% to EUR 826 million compared to the very weak prior-year period. Corresponding sales fell by 7.6% to almost 820 million euros, much worse than market estimated. 

Sartorius (SRT.DE), D1 interval

Source: xStation5

Infineon slowdown due to industrial chip's headwinds?

Bloomberg Intelligence analysts indicated that the biggest Germany chipmaker, Infineon (IFX.DE)  could trim its 2024 revenue outlook by 5%, as TSMC (TSM.US) revised down a semiconductor industry growth for the FY 2024.

• TSMC expect automotive-chip demand lower and just 10% growth pace, in line with a few months ago when recovery was very anticipated. Also, demand on IoT and industrial semis are low, according to company. BI commented also that valuation multiples are higher, as the company is trading at 14x forward P/E, in line with historical average, while demand may be much lower than average, with outlook cut posing a risk for stock market price in short and medium-term.
• Analysts expect that Infineon will expect revenue in line with expectations in Q1 (fiscal Q2) but Q3 (ended in September) may bring lower than anticipated results. The AI power semiconductors (just 1% of revenue) may be too small to drive higher stock prices. Bloomberg Intelligence commented that "Infineon may have recently continued to cut production, both internal and outsourced manufacturing. The market may have already anticipated the cuts but still had excessive expectations for Infineon’s long-term growth."

Infineon (IFX.DE), D1 interval

Source: xStation5