Broker: Canaccord Genuity
Share price: $11.41
Target price: $11 (reduced from $15)
SemiLEDs Corp. manufactures LED chips and components. The Company sells blue, green and ultraviolet (UV) LED chips under its own brand primarily to customers in China, Taiwan and other parts of Asia.
Canaccord Genuity technology analyst Jed Dorsheimer has downgraded SemiLEDs (LEDS) from BUY to HOLD, and reduced his target price from $15 to $11.
The analyst has just completed a tour of Asia, which included meetings with component suppliers and other companies including Epistar. As a result, he concludes that visibility into SemiLEDs’ end markets is weak and that the company may have further near-term disappointments. The broker believes there is currently a large demand gap in China, SemiLED’s largest market, as well as increasing competition amid a growing oversupply of LED chips and components, both in Taiwan and China and worldwide.
Cannaccord believes that chip/component plays may be on the verge of a negative structural shift in their margin structure as the market becomes saturated with excess capacity and as market share wars develop.