Susquehanna starts coverage on STMicro, Analog Devices, Ambarella, Wolfspeed, Infineon
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Investment firm Susquehanna started coverage on several automotive-related semiconductor stocks on Monday, noting that the silicon carbide, or SiC, industry is projected to grow to $10B in revenue by 2030 from roughly $2.5B currently, with most of that growth coming from the auto space.
Analyst Christopher Rolland estimated by 2030, roughly 58% of all cars will be electric vehicles, with a conversion from insulated-gate bipolar transistor to silicon carbide taking place, with SiC accounting for roughly 65% of all converters.
STMicroelectronics: Rolland started STmicroelectronics (NYSE:STM) with a positive rating and a $50 price target, noting the company has the potential to have its earnings multiple re-rated higher due to better growth and margins. This would be the result of the company going after new opportunities, including silicon carbide, gallium nitride and connected microcontrollers, while keeping on top of its "core power management franchise."
Analog Devices: Rolland put a positive rating and a $205 price target on Analog Devices (NASDAQ:ADI), noting it has become the "anti-Texas Instruments (TXN)," as it has been aided by "strong acquisitions," notably its purchases of Linear and Maxim Technology. Analog (ADI) has also been strengthened by further moving into distribution, "value creation" incentives and dual-sourced third-party manufacturing.
Rolland also noted that the moves into specialty analog areas, such as health, instrumentation and aerospace, as well as innovation in wireless BMS, have helped the company.
Ambarella: Rolland gave a positive rating and a $90 price target to Ambarella (NASDAQ:AMBA), pointing out that the company has punched "above [its] weight," especially in edge computing and artificial intelligence. 
"Effectively addressing image and A.I. processing against competitors multiple times their size," Rolland wrote in a note to clients. The analyst added Ambarella (AMBA) could be an acquisition target by an automotive company, Tier-1 supplier or another semiconductor company that is looking to "catch up" in autonomous vehicles and robots.
Wolfspeed: Rolland initiated Wolfspeed (NYSE:WOLF) with a neutral rating and a $90 price target, stating it is the "undisputed leader" in silicon carbide, but its valuation leaves little margin for error.
Infineon: Rolland started Infineon (OTCQX:IFNNY) with a neutral rating and a â¬33 price target, explaining its entry into new markets such as silicon carbide and gallium nitride could come at the expense of the company's existing incumbency in the automotive market, notably with internal combustion engines or insulated gate bipolar transistor electric vehicles.
Last week, Citi reiterated that Analog Devices (ADI) was the firm's top pick in the chip sector amid ongoing weakness.