DAVY VIEW

XP Power (XPP) issued an ad-hoc trading update on February 16th, two weeks before its FY23 preliminary results. While the order intake in January looks in-line with our estimates, the outlook for H124 order intake has worsened, with a bigger air-gap than anticipated as lead times reduce to pre-COVID levels. The concerning element is the Healthcare destocking – a level not seen in 12 years covering XPP. We downgrade our FY24E adjusted EBITA by 40% and FY25E by 25%. A significant re-rating of our international peer group mostly offsets our lowered FY25E EBITDA forecast. Our new price target is 2,530p, providing significant share price upside.