The Zhitong Finance App learned that Deutsche Bank released a research report to maintain Infineon's “buy” rating, but lowered the target price from 85 euros to 75 euros to reflect the recent reduction in the semiconductor industry's valuation ratio. Based on the November 11 closing price of €52.12, the new target price still implies an upward margin of around 44%. Deutsche Bank pointed out that Infineon performed well in the fourth fiscal quarter. The guidance was significantly better than normal seasonal levels, and the biggest surprise came from the market's generally cautious automobile business before.
The AI business is strong, and the automotive business guidance is the biggest surprise
Infineon's revenue for the fourth fiscal quarter ending September was 4.7 billion euros, up 13% month-on-month and 19% year-on-year, in line with expectations. Growth is broad-based. The three major sectors of automotive, green industrial power, and power and sensor systems all contributed. Among them, demand for AI-related infrastructure and data centers continues to lead.
The company expects AI business revenue to be close to 4 billion euros in fiscal year 2027, up about 80% year on year; the group's revenue guide is about 20 billion euros, up more than 20% year on year. Deutsche Bank considers this guidance “impressive”.
Deutsche Bank made it clear in the research report that the biggest positive surprise came from the automobile business — investors have been cautious about the growth prospects of this business for some time. Infineon expects double-digit growth in the automotive business in fiscal year 2027, supported by winning contracts in fields such as Ethernet, software-defined vehicles, and MOSFETs, as well as an increase in share due to the OEM structure. The trend of winning contracts for the high-voltage electric drive business is also accelerating, and revenue contributions are expected to increase significantly from 2028.
Deutsche Bank believes that against the backdrop of overall weakness in the global automotive market, Infineon's automotive business has returned to a strong long-term growth path. Based on AI and improvements in automotive business growth, Deutsche Bank raised its earnings per share forecast for FY2027/FY2028 by about 4% and 3%, respectively.
FY2027 guidance is ambitious, but there is room for improvement
According to Deutsche Bank, Infineon's 2027 guidance appears ambitious in the context of the company's historical growth trajectory and target operating model of 10% or more, but it still sees a number of potential upward drivers.
First, only the announced price increases are currently included in the guidelines. Deutsche Bank expects more price increases in the future, and its model only assumes a slight increase in prices at the group level. Second, in terms of the AI business, as production capacity in Dresden and beyond climbed smoothly, Deutsche Bank reaffirmed Infineon's ability to achieve revenue of 4.5 billion euros or more. Third, assuming an exchange rate of 1.15 EUR/USD, based on the current spot exchange rate, the Group's revenue growth rate will be about 2% higher, and the operating profit margin will be nearly 100 basis points higher. As a result, Deutsche Bank believes that it is highly likely that Infineon will raise this guidance during 2027.
The target price reduction reflects the decline in peer valuations, and the growth logic is still stable
Despite raising profit forecasts, Deutsche Bank lowered Infineon's target price from €85 to €75 to reflect the recent decline in the semiconductor industry's valuation multiples.
Deutsche Bank emphasized that Infineon's leading manufacturing cost position in the 300mm silicon, GaN, and current SiC fields, combined with the “Step Up” efficiency plan's optimization of traditional back-end and front-end manufacturing layouts, and withdrawal from low-margin automotive products, should bring about a more structured long-term profitability. The stock remains one of Deutsche Bank's preferred targets in European technology and global semiconductors.