Vishay Intertechnology, Inc.

VSH Details

Vishay Intertechnology, Inc. (NYSE: VSH) produces one of the world's most comprehensive portfolios of discrete semiconductors and passive electronic components, which are critical to innovative designs in the automotive, industrial, computing, consumer, telecommunications, medical and other allied markets. Based on product functionality, it is divided into six segments: MOSFETs (metal-oxide-semiconductor field-effect transistors), diodes, optoelectronic components, resistors, inductors, and capacitors.

Latest News:

• Recent Upgrade: On March 28, 2022, VSH has announced the addition of a smaller 0805 case size to its TNPV e3 series of Automotive Grade high voltage thin film flat chip resistors. The Vishay Draloric TNPV0805 e3 is the first device in the industry to combine high operating voltages up to 450 V with tight tolerances of 0.1 percent and low TCR down to 10 ppm/K in the compact 0805 case size. The TNPV0805 e3 replaces larger resistors and multiple devices in similar case sizes without compromising precision due to its small size and high voltage capability. 

FY21 Results:

• Surge in Topline: The company reported a YoY growth of 29.52% in net revenue to USD 3.24 billion in FY21 (ended December 31, 2021) from USD 2.50 billion in FY20, driven by growth in demand and manufacturing capacities.
• Growth in Profitability: In FY21, VSH's net income increased to USD 297.97 million from USD 122.92 million in FY20.
• Cash and Debt Position: The company had USD 920.85 million in cash and cash equivalents (including short-term investments) as of December 31, 2021, and total debt of USD 455.67 million.

Key Risk:

• Supplier Concentration Risk: VSH acquires the majority of its raw materials from a small number of suppliers worldwide. As a result, if the company has trouble procuring certain raw materials in sufficient quantities, if their quality is poor, or if suppliers raise their prices, its operating performance may suffer.

Outlook:

• Q1FY22 Estimates: The company stated in its Q4FY21 statement that it expected its Q1FY22 revenues to range between USD 820 and 860 million, with a gross margin of 27.3% (+/- 50 basis points) assuming Q4FY21 exchange rates.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

VSH's stock price has fallen 8.28% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 17.58 to USD 26.50. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 25.65.

Considering the correction in the stock price, recent upgrades, solid margins, positive outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 20.61, up 1.93% as of March 29, 2022.

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.