Navitas Sales Likely To Double In 2023 From Gen-4 GaN Rollouts In Newer And Higher Margin Markets, Analyst Says

Needham analyst Quinn Bolton reiterated Navitas Semiconductor Corp NVTS with a Buy and an $8 price target.
NVTS reported in-line 4Q22 results and guided 1Q23 flat Q/Q.
NVTS reiterated that it expects sales to double Y/Y due to additional SiC capacity ramping in 2Q23, its entry into new markets, and its expectation for a consumer recovery (high-speed chargers in China) beginning in 2Q23.
1Q23 will be the sales and gross margin trough, Bolton mentioned in Friday’s note titled “Revenue On Track To Double in 2023, and That’s Just the Start.”
As Gen-4 GaN products are rolled out and penetrate new, higher margin markets, and SiC continues on its growth trajectory (currently higher GM than GaN), gross margin will improve incrementally throughout the year and trend to the mid-40% level exiting 2023.
Given the additional SiC supply capacity coming online in 2023, recovery of the consumer market (mainly China mobile fast charging), and entry into new markets, NVTS reiterated its expectation that sales will double Y/Y in 2023.
NVTS has been somewhat limited in its SiC shipments due to supply constraints. However, it has entered into a significant supply agreement to increase its SiC capacity by 5x (by early-2024, which is significantly higher than near-term shipments).
The additional supply capacity will be meaningful in 2Q23.
This additional SiC supply and NVTS’ belief in a mobile recovery beginning in 2Q23 led the analyst to project strong growth throughout 2023, with significant H/H growth in C2H23.
High-efficiency requirements for power supplies and secular trends like AI/ML are becoming more vital than anticipated tailwinds pulling forward the adoption rates of GaN and SiC.
NVTS sees mobile charging inventory levels worked down while the backlog is recovering, which should increase investors’ confidence in the company’s guidance.
Price Action: NVTS shares traded higher by 13.90% at $6.58 on the last check Friday.

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