Shares of Swiss semiconductor supplier VAT Group rose 0.7% to 618.40 francs on Wednesday, defying broader weakness in technology and semiconductor equities. The gain followed an upgrade from U.S. investment bank Jefferies, which raised its rating on VAT from ‘Underperform’ to ‘Hold’ and increased its price target from 560 to 646 francs.
The upgrade comes after VAT’s stock surged more than 170% over the past year, prompting a reassessment of valuation risks. Jefferies analyst Om Bakhda, previously among the most bearish on the stock, acknowledged that the scope for further downside has narrowed significantly following a nearly 17% correction since early July. VAT’s forward price-to-earnings ratio remains elevated at about 45x, though this is below the peak of over 61x reached in July.
Bakhda cited limited localization risk as a mitigating factor, noting that VAT supplies both Western and Chinese manufacturers, reducing exposure to any single market. However, he cautioned that rising order backlogs could signal future inventory build concerns. He also trimmed earnings estimates due to higher projected costs.
With Jefferies’ upgrade, only one of 17 analysts covering VAT maintains a ‘Sell’ recommendation. Eight analysts now advise buying, with the remainder recommending holding. The average price target stands at just under 700 francs, indicating further upside potential despite the recent rally.
