UOB Kay Hian analyst John Cheong has downgraded AEM Holdings to “hold” from “buy” with a lower target price of $5.02, 10% down from his previous target price of $5.60.
“We roll over our valuation base year to FY2023 and peg it to a lower P/E multiple of 10.5x, or +0.5 standard deviations (s.d.) of its historical mean (down from 15.6x, or +2 s.d. to its historical five-year mean),” the analyst writes in his Aug 16 report.
“The reduction in our P/E multiple peg is to capture the potential weaker sentiment in the semiconductor industry as more global players, including Intel, are cautioning for a weaker near-term outlook,” he adds.