NVTS Rises 7% in a Month: How Should Investors Approach the Stock?

Core Viewpoint - Navitas Semiconductor (NVTS) has shown strong performance in the stock market, outperforming its peers and the broader technology sector, driven by robust sales in Mobile and Consumer markets, as well as growth in Electric Vehicles (EVs) [1] Group 1: Stock Performance - NVTS shares have gained 6.6% over the past month, compared to a 1.8% return for the Zacks Computer and Technology sector [1] - The company has outperformed the Zacks Electronics-Semiconductors industry, which appreciated by 5.1% in the same period [1] - Competitors Cirrus Logic and FormFactor saw declines of 1.8% and 1.4%, respectively, while Ambarella gained 3.1% [1] Group 2: Product Launches and Innovations - NVTS has launched a new portfolio of Gen-3 Fast (G3F) 650 V and 1,200 V SiC MOSFETs, enhancing switching speed, efficiency, and power density for various applications [2] - The introduction of a 4.5 kW AI data center power supply reference design showcases the highest power density of 137 W/in3 and over 97% efficiency [2] - The expanded adoption of GaNFast ICs by Samsung in multiple smartphone models, including Galaxy A and Galaxy Z series, indicates significant market penetration [3] - The launch of GaNSlim, a new generation of highly-integrated GaN power ICs, aims to facilitate the development of small form factor, high-power-density applications [3] Group 3: Financial Guidance and Performance - For Q3 2024, NVTS expects revenues of $22 million, indicating a sequential growth of 7% and a year-over-year growth of 0.41% [4] - The gross margin for Q3 is anticipated to be around 40%, with expectations for margin improvements as demand recovers in higher-margin markets [4] - The Zacks Consensus Estimate for loss is projected at 6 cents per share, unchanged over the past 60 days, compared to a loss of 4 cents in the same quarter last year [5] Group 4: Valuation and Market Position - NVTS currently reflects a stretched valuation with a Value Score of F, indicating caution for potential investors [6] - The company holds a Zacks Rank 3 (Hold), suggesting that investors should wait for a more favorable entry point [6]