DAVY VIEW

XP Power has provided a steadily reassuring update on Q424 trading. While the order intake didn’t see the step-up many had hoped for, the underlying order trends are improving. FY adjusted EBITA is expected to be within the consensus range, and net debt-to-EBITDA was better than guidance at 2.3x. With destocking expected to end in H125 and the semicon outlook still positive, we expect an improvement in all financial metrics. The shares continue to look undervalued, and a re-appearance of a bid from Advanced Energy has high probability, in our view. We reiterate our ‘Outperform’ rating and 2,200p price target.