Soitec Shares Surge After JPMorgan Upgrades Stock, Doubles Price Target

Shares of French semiconductor materials supplier Soitec surged more than 11% on Wednesday after JPMorgan upgraded the stock to Overweight from Neutral. The investment bank also more than doubled its price target to €200 from a previous €98, citing a significant reassessment of the company's growth prospects.

Photonics Boom Overwhelms Mobile Concerns

The upgrade is rooted in JPMorgan's revised outlook for Soitec's Silicon Photonics (SiPho) business. Analyst Craig McDowell wrote that prior concerns about market decline in the Mobile segment "are overwhelmed by raised expectations for the Silicon Photonics business."

JPMorgan now forecasts that the SiPho division alone could exceed €1 billion in revenue by fiscal year 2030. The bank also highlighted that this high-growth segment carries a contribution margin of more than 75%, which is well above Soitec's group average and is expected to drive significant profit expansion.

Revised Financial Forecasts

Reflecting this bullish stance, JPMorgan significantly lifted its financial estimates for Soitec. The bank's key forecast revisions include:

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• Fiscal 2028 Revenue: Raised by nearly 32% to €1.057 billion.
• Fiscal 2028 Adjusted EPS: Lifted to €6.63 from a prior estimate of €1.42.
• Gross Margins: Forecast to reach the mid-40s by fiscal 2029, surpassing the company's previous peak of 37%.
• Operating Margins: Expected to exceed 30% in the long term, driven by the profitable SiPho segment.

Outlook and Capital Expansion

While optimistic, JPMorgan still anticipates a sharper-than-consensus decline in Soitec's RF-SOI segment, which serves the mobile market, due to weak volumes and inventory digestion. However, the analyst described the potential revenue miss in mobile as "immaterial in the context of significant upside on SiPho."

To support the anticipated demand, the bank believes Soitec will likely need to expand its Singapore manufacturing facility, a project estimated to cost approximately €700 million. McDowell noted that while investor opinion on Soitec is currently split, he expects the scale of upcoming consensus upgrades will make it "increasingly difficult for skeptics to maintain this view."