Advanced Energy Industries (AEIS), a provider of precision power conversion, measurement, and control solutions, reported weaker-than-expected second-quarter results, due to supply chain disruptions and operational inefficiencies.
Following the disappointing Q2 results and Q3 guidance, shares decreased 12.1% to close at $90.37 on August 4.
The company reported adjusted earnings of $1.25 per share, up 5.9% year-over-year but lower than the Street’s estimate of $1.27 per share. (See Advanced Energy stock charts on TipRanks)
Additionally, revenue for the quarter increased 6% to $361.31 million, compared to the year-ago period, but this result missed analysts’ estimates of $362.14 million.
Sharing his thoughts post-earnings release, Steve Kelley, President and CEO of the company, said, “Although the near-term supply chain and operating environment remains challenging, demand continues to strengthen across all our markets, and we have solid visibility into 2022. We are winning with our highly-engineered, proprietary power solutions, positioning the company to deliver long-term profitable growth.”
Based on the current market conditions, the company guided for a sequential decline in its third-quarter revenue and earnings, also falling short of consensus estimates.
Advanced Energy forecasts third-quarter revenue and earnings of $325-$355 million and $0.60-$1.00 per share, respectively. The consensus estimates for revenue and earnings are pegged at $377.8 million and $1.40 per share, respectively.
In response to the results, Susquehanna analyst Mehdi Hosseini reiterated a Buy rating on the stock but lowered the price target to $112 (23.9% upside potential) from $125.
Hosseini said, “AE continues to see strong demand while sales continue to be impacted by supply shortages…we maintain our Positive opinion as we believe compares (for both top-line and margin profile) will favor AE looking into 2022.”
Furthermore, the analyst believes that Advanced Energy will have to perform well in the next few quarters to regain investors’ confidence.
The Wall Street community is cautiously optimistic about AEIS, with a Moderate Buy consensus rating based on 4 Buys and 2 Holds. The average Advanced Energy price target of $116 implies 28.4% upside potential to current levels. Shares have gained 17.9% over the past year.
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