NVTS Rises 7% in a Month: How Should Investors Approach the Stock?

Navitas Semiconductor NVTS shares have gained 6.6% in a month, outperforming the broader Zacks Computer and Technology sector’s return of 1.8%.

Over the same time frame, it has also outperformed the Zacks Electronics- Semiconductors industry and peers, including Cirrus Logic CRUS, FormFactor FORM and Ambarella AMBA.

Shares of Cirrus Logic and FormFactor have lost 1.8% and 1.4%, respectively, while Ambarella has gained 3.1% in the same time frame. The industry appreciated 5.1% in a month.

This outperformance can be attributed to strong sales across the Mobile and Consumer markets followed by a solid boost from the Appliance and Industrial segments.

Electric Vehicles (EVs) are touted to be the largest contributor in driving top-line growth, including more than 200 customer projects in the pipeline.

Portfolio Expansion Aids NVTS’ Prospects

Navitas Semiconductor is benefiting from its recent product launches.

NVTS achieves an important milestone with the launch of a new portfolio of Gen-3 Fast (G3F) 650 V and 1,200 V SiC MOSFETs.

G3F enables the fastest switching speed, highest efficiency and increased power density for applications, such as AI data center power supplies, on-board chargers, fast EV roadside super-chargers, and solar / energy-storage systems.

The release of its 4.5 kW AI data center power supply reference design, with optimized GaNSafe and G3F SiC power components, is a plus. This optimized design facilitates the world’s highest power density with 137 W/in3 and more than 97% efficiency.

NVTS further extends its G3F 650 V SiC MOSFETs portfolio into a thermally enhanced, rugged, high-speed, surface-mount Transistor Outline Leadless package designed for demanding, high-power and high-reliability applications. This might be beneficial for NVTS stock.

The expanded adoption of Navitas’ GaNFast ICs by Samsung from the original Galaxy S22, S23 and S24 to the mainstream Galaxy A and unconventional Galaxy Z Fold6 and Galaxy Z Flip6 smartphones with enhanced Galaxy AI features is a notable development.

Recently, NVTS’ introduction of GaNSlim, a new generation of highly-integrated GaN power ICs to ease and speed the development of small form factor, high-power-density applications by offering the highest level of integration and thermal performance is a notable development.

NVTS’ Q3 Guidance Not So Bright

However, macroeconomic uncertainties and inventory backlogs are concerns for NVTS.

For the third quarter of 2024, NVTS expects revenues to be $22 million (+/- 0.5 million). At the midpoint, this suggests sequential growth of just 7%.

The Zacks Consensus Estimate for revenues is pegged at $22.07 million, suggesting year-over-year growth of 0.41%.

Gross margin for the third quarter is expected to be approximately 40% (+/-50 basis points).

NVTS expects margin improvements to align with demand recovery in higher-margin markets.

For the third quarter of 2024, the Zacks Consensus Estimate for loss is pegged at 6 cents per share, unchanged over the past 60 days. It reported loss of 4 cents in the year-ago quarter..

In the trailing four quarters, NVTS’ earnings beat the Zacks Consensus Estimate twice, missed once and were in line with the remaining one, with the average negative surprise being 2.50%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Zacks Rank and Valuation

NVTS reflects a stretched valuation at this moment, as suggested by a Value Score of F.

Navitas Semiconductor carries a Zacks Rank #3 (Hold) at present, implying that investors should wait for a favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


 

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