X-Fab, playing the semiconductor race

The European Commission will present a draft law on semiconductors at the start of the year. Announced in September, this text aims to support the technological sovereignty of the European Union, semiconductors also being an issue of balance of power from a geopolitical point of view.

A “European Chips Act” which should make it possible to counter the chronic shortage of chips and which blocks the production chains of cars, computers, or even smartphones. This would also be a first step for Europe with the aim of becoming an economic power in the sector.

Indeed, the EU’s objective is to double the production capacity of chips in Europe by 2030, which corresponds to producing 20% ​​of the world’s semiconductors (the world market for semiconductors is estimated around 500 billion euros).

From a fundamental point of view, X-Fab’s activity is constantly growing, the cash flow is positive and the turnover has increased by 13% over three years. The company maintains its level of profitability, despite its rapid growth, with a gross operating surplus estimated over the last financial year at nearly 70 million. The price to earnings ratio is 17 times, the lowest of comparable companies in the sector. The results will be published on February 10.

Following the post-Covid rebound, prices continue to climb. The stock is currently in a medium-term bullish channel. We expect the movement to continue with the support of the 100-day and 200-day moving average, especially as there is still room before the upper limit on the RSI is reached.

The target is 10 euros, or 16% growth. We place a stop order at 7.95 euros, i.e. 8% below the current price, i.e. a strategy offering a ratio of 2.

Promotional recommendation.