Kepler Cheuvreux has adjusted its recommendation on Siltronic, lowering the stock to a "hold" from a previous "buy" rating while increasing its target price to €90 from €65. The brokerage said the stock's recent rally now largely reflects an anticipated, volume-driven recovery in the wafer industry.
In its note, Kepler Cheuvreux acknowledged that industry fundamentals are improving. The brokerage singled out stronger demand for leading-edge logic and memory wafers as a basis for increased confidence in growth prospects for 2027-28.
Despite that improved outlook, Kepler Cheuvreux said the case for further significant upward revaluation of Siltronic is limited at current levels. Two factors underpinned this view: recent and planned capacity additions across the sector, and the fact that roughly 70% of Siltronic's 300mm wafer volumes are secured under long-term agreements. The broker argued these factors reduce the likelihood of a pricing-driven upside scenario.
"Significant excitement is being priced in," the brokerage wrote, adding that "at current valuation levels, we believe the market is fairly reflecting the volume-driven recovery path, and consequently, we take a breather after the great share price run."
Kepler Cheuvreux also said it is "not willing to price in the blue-sky scenario - a pricing-driven upward spiral - today," noting that it regards the wafer segment as less favourable than some other semiconductor end markets. The brokerage pointed to substantial greenfield investments made in recent years and reiterated that the high proportion of long-term agreements should constrain pricing surprise potential, which would be necessary for a blue-sky outcome.
Finally, Kepler Cheuvreux anticipated that operational performance in the second quarter should remain muted.
Contextual note: The brokerage's repositioning reflects a view that much of the anticipated volume recovery is already embedded in the stock price, while structural factors limit additional upside driven by pricing.