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Power Components Maker Vicor Faces Complex Challenges, Analyst Sees Range-Bound Shares Ahead

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Power Components Maker Vicor Faces Complex Challenges, Analyst Sees Range-Bound Shares Ahead

Industry Complexities Impact Vicor’s Outlook

Vicor Corporation (VICR), the power components maker, is facing a challenging road ahead, according to Needham analyst N. Quinn Bolton. The analyst downgraded Vicor from Buy to Hold, citing various industry complexities that could create hurdles for the company’s growth.

Underwhelming Bookings and Backlog

The analyst notes that both bookings and backlog for Vicor remain underwhelming. Despite the anticipation of a balanced bookings-to-billings ratio by the fourth quarter of FY23, management has declined to provide any insight into when the recovery will happen. This lack of clarity has dampened visibility for the company.

Clouded Visibility in a Complex Landscape

The complex nature of the industry has further clouded Vicor’s visibility. The analyst expects that near-term wins in lateral and lateral-vertical markets will generate bookings for the company. However, management’s reluctance to discuss the previously announced AI platform win indicates a shrinking opportunity for Vicor.

Threats and Challenges

Google’s recent move to a two-stage architecture poses a threat to Vicor’s factorized power (FPA) content. The shift has led to lawsuits and the adoption of Delta’s 48V-12V module solution on Google’s motherboards. While the analyst believes the threat of an injunction could bring Google back to Vicor, they also highlight that this might take time. Additionally, Vicor’s Gen 5 technology is expected to drive AI processor share gains, but product wins and ramp-up are not expected until 2024 and 2025, respectively.

Range-Bound Shares Ahead

The analyst predicts that Vicor shares will remain range-bound over the next 12 months, given the challenges the company faces and the uncertainties in the industry.

Price Action: On the last check Wednesday, VICR shares were trading lower by 28.85% at $37.85.