Panic, CT scanners and hearing aids
Soitec, L’Oréal, Siemens Healthineers, Porsche, X-Fab, GN Store Nord, ArcelorMittal, Compass Group, Aurubis and Rational
Soitec (SOI) A brutal quarter
Soitec just delivered another tough quarter, and this time, the numbers were much worse than expected.
The company has been battling a slowdown in key markets, but the sharp declines in its automotive and AI divisions took everyone by surprise. Despite some positive signs in mobile communications, where sales finally picked up after months of weakness, the losses in other areas were too big to ignore. Automotive, once seen as a strong growth driver, collapsed, and AI-related sales weren’t far behind.
Management had to slash its full-year outlook, admitting that demand just isn’t recovering as quickly as hoped. Worse, the uncertainty isn’t just about this year—next year’s growth is also looking weaker than anticipated. Customers, particularly in automotive and mobile, are still adjusting their inventories, leading to unexpected order cancellations. The optimism that was building around AI as a future revenue driver now seems premature, adding to concerns about where growth will come from.
This was a wake-up call for investors. Many analysts have already cut their forecasts significantly, and more will come.
Soitec had a rough 2024, and if demand doesn’t stabilize soon, 2025 could be just as challenging. The big question now is how long this downturn will last—and whether Soitec has a clear path forward in the face of continued market uncertainty.
L’Oréal (OR) A softer finish to the year
L’Oréal’s fourth-quarter sales came in weaker than expected, continuing the trend of slowing momentum seen in the previous quarter. Growth in North America was softer than anticipated, while northern Asia, particularly China, remained in negative territory. While the decline in Asia was less severe than in Q3, it still weighed on the company’s overall performance.
Despite this, L’Oréal remains confident in a gradual acceleration in sales through 2025. Management expects growth to be closer to 3 percent in the first half before strengthening to around 5 percent in the second half of the year. While this points to an overall annual growth rate of around 4 percent, some investors may hesitate given lingering macroeconomic uncertainties.
While they also reported strong underlying eps growth, largely due to a lower-than-expected tax rate. However, organic sales growth of 5.1 percent was slightly below forecasts, and the operating margin, while solid, didn’t quite meet expectations. There was no surprise super dividend, but the regular payout remains stable, with a proposed dividend of 7 euros per share.
While L’Oréal’s long-term outlook for the beauty market remains strong, we could see the stock’s current valuation as a bit stretched given recent growth trends.
Siemens Healthineers (SHL) Good start, but no change in outlook
Siemens Healthineers kicked off 2025 with a solid first quarter, delivering better-than-expected revenue growth and profitability. Sales climbed nearly 6 percent, beating forecasts, with particularly strong demand in its imaging division, where North America drove most of the momentum.
Computed tomography and molecular imaging stood out as key growth areas, while China and EMEA saw mid-single-digit declines. The company’s diagnostics division also grew, though slightly below expectations, while Varian, its cancer treatment unit, continued to expand steadily. The overall equipment business remains healthy, with a strong order book suggesting demand will stay robust in the coming quarters.
The company confirmed its full-year guidance, expecting revenue growth of 5 to 6 percent and steady profitability.
That said, Siemens Healthineers has been navigating headwinds in China, and while the company is managing well, broader economic uncertainty is keeping expectations in check. While the business fundamentals are strong, the stock may already be fully valued at current levels.
Porsche (P911) The cost of change is higher than expected
Porsche just sent a bit of a shock through its investor base, revealing that its ongoing transformation is going to be much more expensive than anticipated.
The company had already hinted at additional spending, but few expected costs to balloon this dramatically. Porsche is pouring money into updating its combustion engine platforms, battery technology, and expanding its customization options, all part of its plan to stay ahead of shifting market trends. While these moves are meant to strengthen its position long term, the near-term financial hit is unavoidable.
This wasn’t the earnings update investors were hoping for. While 2024’s performance was mostly in line with expectations, the real problem is 2025, where Porsche’s profitability is now expected to take a significant hit. The added expenses will weigh heavily on margins, and with overall sales projected to be flat or slightly down, the market is struggling to justify the stock’s premium valuation. They company insists that these investments are necessary to maintain its leadership in both traditional and electric vehicles, but the scale of spending has caught many off guard.
Now, all eyes are on the full results coming in March, where Porsche will have to convince investors that this strategic overhaul is worth the short-term pain.
Right now, the stock appears to be a bit dead money, with investors questioning whether Porsche’s transition is being managed as efficiently as it could be.
The automaker is at a crossroads—if these investments pay off, it could cement its dominance in the industry, but if costs spiral out of control, the market may start to rethink Porsche’s premium status.
X-Fab (XFAB) Navigating shifts and challenges in 2025
X-Fab just wrapped up a tough fourth quarter for 2024, with results landing at the lower end of what they had anticipated.
The numbers took a hit, especially in the automotive sector, which saw a 15% drop because of some inventory tweaks. The industrial side didn’t fare much better, tumbling by 34%—silicon carbide had a rough patch there. On a brighter note, the medical division held its ground, even managing a small uptick. By the end of 2024, the company saw its net debt balloon, painting a challenging financial picture.
For 2025, X-Fab is eyeing a cautious comeback, predicting a modest revenue bump of up to 7%. While there are glimmers of hope in the industrial and medical sectors, the automotive area is still working through some inventory kinks. They are aiming for a slight improvement in their EBITDA margin, although it’s still not quite what the market was hoping for.
Big plans are in the works for 2026, where X-Fab aims to ramp up growth and profits through new products and expanded capacity. Plus, they’re about to wrap up a major capital spending spree, which should help them get back to positive cash flow and start chipping away at their debt.
Given the recent hurdles and ongoing uncertainty, we are not very excited about X-Fab stock as they work through these transitional times.
GN Store Nord (GN) Gaming shines, Enterprise still struggles
GN Store Nord’s latest results paint a mixed picture. Gaming continues to be a bright spot, with strong organic growth, while the Enterprise division remains in a downturn, showing only tentative signs of stabilization. The company’s Hearing division also posted a solid performance, though it came in slightly below expectations. Overall, revenue was slightly ahead of estimates, but profitability lagged, leaving investors with more questions than answers.
In the Hearing business, North America and Europe showed good momentum, but headwinds in China dampened overall growth. The Enterprise segment, which includes communications and headsets, is still struggling with weak market demand, particularly in key corporate sectors.
The Gaming division, however, stood out, delivering strong double-digit growth, even as the company winds down its consumer audio business. This division is expected to remain a growth driver, though the exit from consumer products will weigh on total revenue.
GN Store Nord expects moderate growth in 2025, with Enterprise slowly recovering and Gaming continuing to expand. However, given the weaker-than-expected profit margins, there seems to be little immediate upside for the stock.
ArcelorMittal (MT) A strong quarter with an eye on future growth
ArcelorMittal delivered a solid fourth-quarter performance, with results coming in ahead of expectations, thanks largely to a strong showing in its mining division.
While the core steel business performed in line with forecasts, the mining segment saw record shipments, helping to offset weaker steel prices in North America. In Europe, cost control measures contributed to resilience, while operations in Brazil continued to benefit from a favorable economic backdrop. The company also maintained a strong cash flow, keeping net debt lower than expected, which reassured investors.
ArcelorMittal is optimistic about steel demand in 2025, forecasting steady growth outside of China. The company expects a global demand increase of up to 3.5%, driven by a mix of restocking activity and improving economic conditions.
With this in mind, the company is pushing forward with key growth initiatives, including the construction of a new electrical steel plant in the U.S. and the expansion of its mining operations in Liberia. These projects reflect ArcelorMittal’s focus on high-growth areas and more specialized steel products, reinforcing its long-term strategy.
Despite the positive momentum, uncertainties around steel pricing and macroeconomic conditions remain, particularly in China and Europe.
Compass Group (CPG) Solid start, but valuation looks stretched
Compass Group kicked off 2025 on a strong note, with first-quarter growth coming in slightly ahead of expectations. The company continues to benefit from strong outsourcing trends, high client retention, and steady demand across its core markets. North America remains the main driver of growth, while Europe is holding up well despite broader economic uncertainties. Encouragingly, Compass has seen no signs of a slowdown in Europe, and management remains confident in meeting its full-year targets.
For 2025, the company expects organic growth of at least 7.5% and high-single-digit EBIT growth. Acquisitions remain part of the strategy, with recent deals in France and Norway expanding its footprint in key markets.
Compass is also making a structural shift, consolidating its Rest of the World division into a new International segment alongside Europe. This streamlined reporting structure is expected to provide better clarity on regional performance moving forward.
While the business fundamentals remain strong, the stock is already trading at a premium compared to its peers, with valuation levels at historic highs. The company’s best-in-class margins and steady shareholder returns support its current position, but the relatively high valuation might indicate there may be limited upside in the short term.
Aurubis (NDA) No major surprises
Aurubis kicked off its new financial year with a solid first-quarter performance, bouncing back from operational challenges in the previous quarter.
The company benefited from higher metal and sulfuric acid prices, as well as strong treatment charges for concentrate, which remained elevated before a significant step-down expected later in the year. After dealing with maintenance-related issues in Hamburg, operations are now running smoothly, allowing for a 28% sequential jump in earnings before tax. Cash flow was another bright spot, with the company turning around from a major outflow last year to a positive free cash flow despite ongoing heavy investments.
Aurubis reaffirmed its full-year guidance, expecting operating earnings before tax to land in the €300–400 million range. While this is slightly below last year’s performance, the dip is largely due to lower treatment charges and higher costs related to growth investments.
The company’s investment program remains in full swing, with a €1.7 billion budget dedicated to strategic expansion, including major spending this year to support future growth. Management remains confident in the long-term demand for copper, driven by the energy transition and rising industrial applications.
The company’s strong position in the growing copper market is a clear advantage, but the valuation looks demanding compared to its peers with no major catalysts for a re-rating in the near term.
Rational (RAA) Good, but prices in
Rational wrapped up 2024 with better-than-expected earnings, as both revenue and profit growth remained solid. The company delivered 6% sales growth for the year, with particularly strong performances in North America, Europe, and Latin America. The iCombi product line saw steady growth, while iVario sales surged by 14%, reflecting the company’s ability to drive demand across its portfolio. Meanwhile, profitability improved significantly, with the EBIT margin rising by 170 basis points to 26.3%, a strong result given the challenging macroeconomic backdrop.
Despite the strong finish to 2024, management is taking a cautious approach to 2025. While the company remains confident in its long-term growth prospects, no formal guidance was issued, with further details expected in March.
The economic landscape, particularly in Europe and Germany, remains uncertain, and Rational is focused on maintaining stability rather than aggressively chasing expansion.
From a valuation perspective, the stock already appears fully priced, trading at a high multiple of earnings with no immediate catalysts for margin expansion.
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