DAVY VIEW

We believe the XP Power (XPP) share price has been held back by investor concern that the expected 2024 recovery in semiconductor activity and wafer fab equipment (WFE) demand will be delayed into 2025. Recent industry news flow looks to dismiss this and confirm a steady H224 weighted recovery. This is our base case for XPP and drives the revenue growth needed to deliver the balance sheet de-levering and the earnings to achieve our 2,550p price target. With scope for further accelerated re-rating during the next six to nine months, we reiterate our ‘Outperform’ rating.