Apple supplier shares targeted despite 40% drop
One of last year’s top-performing European stocks has lost nearly half of its value in the past five months, yet short-sellers keep flocking to it.
Austrian sensor maker AMS has fallen more than 40% from its all-time peak in March amid concerns over the smartphone supply chain and shorters are betting on more downside.
Meanwhile, brokers rate it as among the best buys in Europe, boosted by a technological edge in sensors used in Apple’s iPhone X.
No analysts among the 18 surveyed by Bloomberg recommend selling AMS, and its consensus rating is the eighth-highest among the 600 companies making up the Stoxx 600 Index, better than any semiconductor peers in the benchmark.
The positive view is evident in lofty growth expectations, at least partly explained by the company’s first-mover advantage in 3D sensing components, used in applications such as the iPhone X’s facial recognition.
The company’s net income is expected to more than double next year to nearly $500m (€433m), according to a survey of 13 analysts.
Apple’s push into augmented reality has made AMS a crucial supplier for the optical components it needs to differentiate its flagship phone from competitors’ offerings.
The big question for AMS investors is how long their advantage in that technology will last.
With new technology, you can charge a customer like Apple a higher price, because you’re the only supplier,” Neil Campling, an analyst at Mirabaud, said.
“That’s where the big disconnect between the bulls and bears at the moment is, will they deliver that operating leverage and profit, will they remain a sole source,” he said.
Other chipmakers have also hit a rough patch in the markets lately
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