DAVY VIEW

XP Power’s (XPP) share price has been struggling to gain traction post a steady Q3 update (October 8th) and against share price volatility in the global semi-conductor sector. The AI-driven upside is being somewhat offset by the weaker macro outlook. We continue to expect a recovery in semi-conductor related volumes for XPP in FY25; together with Industrial Tech not getting any worse and Healthcare seeing the end of destocking, this should deliver improved H225 revenue and a step-up in profitability. This will drive further de-levering of the balance sheet back to a more sustainable level. We reiterate our ‘Outperform’ rating with a refreshed price target (PT) of 2200p and see the shares as materially undervalued versus listed peers.