Power Components Maker Vicor Faces Challenges Ahead: Analyst Sees Range-Bound Shares Amid Industry Complexities

Needham analyst N. Quinn Bolton downgraded Vicor Corporation VICR from Buy to Hold.

Vicor reported third-quarter FY23 revenue of $107.8 million, beating the analyst consensus estimate of $106.600 million. EPS of $0.37 was above the consensus.

The analyst said both bookings and backlog remain underwhelmed and that after Q2 FY23, the investors anticipated B:B to approach 1:1 by 4Q23, but management declined to provide any color on when bookings and B:B would recover. 

Moreover, the analyst says visibility is clouded by the complex landscape. Near-term, the analyst expects lateral/lateral-vertical wins to generate bookings. 

According to the analyst, management's less willingness to discuss the AI platform win announced last quarter shows a shrink in opportunity.

Alphabet Inc. GOOGL GOOG Google's move to a two-stage architecture would lead to Vicor losing its factorized power (FPA) content in this transition.

Google is opting to use Delta's 48V-12V module solution on many of its motherboards which has led to last quarter's lawsuits.

The company believes the threat of an injunction could drive Google to come back to VICR, which the analyst says might take time.

Management feels strongly its Gen 5 technology will be a catalyst for AI processor share gains, but Gen 5 products wins will need to stack up in 2024, and product won't ramp until 2025, writes the analyst.

The analyst says Vicor shares will be range-bound for the next 12 months.

Price Action: VICR shares are trading lower by 28.85% at $37.85 on the last check Wednesday.