On Friday, Citi resumed coverage on Renesas Electronics (6723:JP) stock with a Neutral rating, setting a price target of ¥2,300. The move comes as the semiconductor industry experiences ongoing inventory adjustments that began in late 2023. The firm noted that while the automotive and industrial sectors are currently undergoing corrections, Renesas shares have seen a pullback.
The analyst from Citi pointed out that typically, Renesas's stock should be nearing a low point according to the cycle. However, the firm believes that reaching this bottom could be delayed. The prolongation of the inventory correction process, driven by the broader economic slowdown, is cited as a contributing factor.
Additionally, the firm highlighted Renesas's earnings structure and its sensitivity to the appreciation of the yen as a reason for caution. These factors have influenced Citi's decision to assign a Neutral rating to the company's shares.
Renesas Electronics, which is a key player in the semiconductor space, particularly for the automotive and industrial markets, is navigating through a period marked by inventory adjustments. The company's performance and stock price are being closely watched as it manages these industry-wide challenges.
Citi's coverage update and price target suggest a wait-and-see approach, reflecting the uncertainty surrounding the timing of a recovery in Renesas's stock performance amidst current market conditions. The firm's analysis provides investors with a perspective on the stock's potential trajectory in the near term.
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