Latest news with #CHIPSActof2022
Business Insider
23-05-2025
- Business
- Business Insider
Wolfspeed Stock (WOLF) Craters Over 59% on Bankruptcy News
Shares of semiconductor player Wolfspeed (WOLF) cratered over 59% on May 21 after the Wall Street Journal reported about its probable bankruptcy. The chipmaker and component supplier is set to file for a pre-packaged Chapter 11 bankruptcy within weeks, the report said, and most creditors are likely to support the proceedings. Confident Investing Starts Here: Wolfspeed is struggling with a mounting debt load that far exceeds its cash balance. In March, the company rejected several out-of-court settlement proposals from bond holders after its largest backer rebuffed the offers. Now, bankruptcy appears to be the only option as it has become harder to refinance its soon-to-mature debt securities. Diminishing chip demand from the automotive and industrial markets, coupled with stiff competition from Chinese players and tariff uncertainty has undermined Woldspeed's ambitions. Here's How Wolfspeed Got into This Mess Wolfspeed is an all-American semiconductor manufacturer and would have really succeeded under President Donald Trump's 'Make in America' initiative, were it not for its debt problems. In October 2024, Wolfspeed secured a $750 million financing deal with a group of investors led by Apollo Global Management APO +0.10% ▲ . At the time, Wolfspeed was also expected to receive up to $750 million in funding under the CHIPS Act of 2022. However, that taxpayer money was contingent on Wolfspeed refinancing its convertible notes maturing in 2026, 2028, and 2029. The silicon carbide chipmaker has roughly $6.5 billion in debt, while its cash and cash equivalents balance stood at $1.3 billion as of March 31, 2025. Out of the looming debt, the Apollo-led group holds $1.5 billion in senior secured loans, which forms the top-most tier. The group has the right to approve any new secured financing and was also responsible for rejecting all restructuring offers in March. Those deals included a provision for Wolfspeed's largest lender, Japan's Renesas Electronics, to convert some of its outstanding convertible notes to equity. Notably, Apollo has a 'make-whole' provision in the agreement, which means it remains unscathed from Wolfspeed's bankruptcy proceedings. Wolfspeed recently warned investors about its ' going concern ' risks and also cut its 2026 revenue outlook to $850 million, significantly below the consensus. The company has tried to streamline costs by cutting 20% of its workforce and shuttering facilities. However, to make matters worse, intense competition has led to a heated price war among chipmakers over the N-type SiC substrates, one of Wolfspeed's specialties. Will Wolfspeed Stock Recover? On TipRanks, WOLF stock has a Hold consensus rating based on three Buys, two Holds, and four Sell ratings. Also, the average Wolfspeed price target of $4.13 implies 141.5% upside potential from current levels. Meanwhile, the stock has lost 74.3% so far this year, and chances of a recovery seem very slim at the moment.
Yahoo
16-05-2025
- Business
- Yahoo
Veralto's Growth Prospects Shine Despite Competitive Risks
Veralto Corporation VLTO is currently benefiting from its leadership in Water Quality and PQI segments, strategic acquisitions, and growing dividends. Quarterly adjusted earnings of 95 cents per share surpassed the consensus mark by 9.2% and increased 13.1% year over year. Total revenues of $1.33 billion beat the consensus mark by a 3.8% margin and grew 6.9% from the year-ago quarter. Veralto Corporation revenue-ttm | Veralto Corporation Quote VLTO's leadership in the Water Quality segment positions it to capitalize on robust growth opportunities in the United States. The industrial and municipal verticals serve as key drivers of this growth. In the industrial vertical, the CHIPS Act of 2022 provides a significant tailwind through semiconductor manufacturing grants, research investments and tax credits. Additionally, the global increase in semiconductor production enhances VLTO's prospects, as ultra-pure water is critical for semiconductor manufacturing. While the semiconductor industry has faced recent challenges, the long-term outlook remains favorable, driven by rising demand for digital tools, AI and autonomous technologies, which necessitate more semiconductor production. In the municipal vertical, increased U.S. government funding to address the country's water infrastructure challenges offers a strong growth catalyst. This support is expected to boost investments in upgrading and modernizing water systems, further driving demand for VLTO's solutions. The company's WC revenues grew 3.4% year over year in 2024. VLTO has established itself as a trusted leader in the Product Quality and Inspection (PQI) segment, serving the major consumer-packaged goods (CPG), life sciences, and pharmaceutical companies. The Marketing & Coding (M&C) sub-segment is the largest contributor to PQI's revenues, reflecting its critical role in driving industry growth. M&C has become indispensable for CPG and pharmaceutical companies in a digital-first world. In the pharmaceutical sector, coding ensures regulatory compliance, facilitates accurate data management and enhances communication with healthcare professionals and patients. These capabilities are vital as the industry increasingly relies on digital solutions for efficiency and transparency. For CPG companies, M&C integrates supply chain operations with consumer insights, enabling quick adaptation to market trends and fostering stronger customer engagement. This innovation helps businesses stay competitive in an ever-evolving landscape. By addressing these critical needs, VLTO empowers its clients to innovate, build stronger customer relationships and maintain a competitive edge. This robust positioning within high-growth industries highlights VLTO's potential for sustained success, making it an appealing investment opportunity for stakeholders seeking exposure to innovative and resilient markets. The company's PQI revenues grew 3.7% year over year in 2024. The recent acquisition of TraceGains strengthened the segment by adding advanced digital workflow solutions, particularly for the food and beverage industry. Veralto's Trojan Technologies is set to strengthen its European customer support and service excellence through the planned acquisition of AQUAFIDES, expected to be finalized in the second quarter of 2025. This acquisition will also broaden VLTO's UV treatment portfolio by adding high-quality, efficient, and purpose-built systems. VLTO's commitment to shareholder returns, despite being a recent entrant to the stock market, makes it an appealing investment option. Since its NYSE listing in late 2024, the company has consistently paid a quarterly dividend of 9 cents, demonstrating financial discipline. The recent 22% dividend increase to 11 cents per share further underscores VLTO's confidence in its financial strength and growth prospects. This early adoption of a progressive dividend policy is particularly significant for a newly listed company, as it signals stability, profitability and a shareholder-friendly approach. VLTO faces competitive pressure from established players and new entrants in the PQI and digital workflow solution sectors. These competitors may offer similar or superior technologies at more competitive prices, limiting VLTO's market share and growth potential. As the industry becomes more crowded, the company could struggle to differentiate its offerings, which might lead to reduced customer loyalty or price compression. Competitive pressure may hinder VLTO's ability to maintain strong margins, ultimately affecting profitability and investor confidence. For risk-averse investors, the potential integration risks associated with VLTO's acquisition of TraceGains could be a deterrent. The uncertainty surrounding the integration process, such as potential operational disruptions, increased costs, or delays in realizing synergies, increases risk. If the integration faces challenges, it could negatively impact VLTO's short-term profitability and growth projections, creating volatility. VLTO carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. S&P Global SPGI reported better-than-expected first-quarter 2025 results. SPGI's adjusted EPS of $4.37 surpassed the Zacks Consensus Estimate by 3.6% and gained 9% year over year. Revenues of $3.8 billion beat the consensus estimate by 2% and grew 8.3% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Verisk VRSK has reported better-than-expected first-quarter 2025 results. VRSK's adjusted earnings were $1.73 per share, surpassing the Zacks Consensus Estimate by 3.6% and increasing 6.1% from the year-ago quarter. Total revenues of $753 million beat the consensus estimate marginally and increased 7% on a year-over-year basis. Interpublic IPG reported mixed first-quarter 2025 results. The company's earnings topped the Zacks Consensus Estimate, while revenues missed the mark. IPG's adjusted earnings of 33 cents per share surpassed the Zacks Consensus Estimate by 10% but decreased 8.3% from the year-ago quarter. Revenues before billable expenses (net revenues) of $2 billion missed the consensus estimate by a slight margin and declined 20% year over year. Total revenues of $2.3 billion decreased 7.2% year over year but outpaced the Zacks Consensus Estimate of $2 billion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Interpublic Group of Companies, Inc. (The) (IPG) : Free Stock Analysis Report Verisk Analytics, Inc. (VRSK) : Free Stock Analysis Report S&P Global Inc. (SPGI) : Free Stock Analysis Report Veralto Corporation (VLTO) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
