UBS has revised its valuation of Indie Semiconductor Inc (NASDAQ: INDI), lowering the price target to $4.25 from $5.00 while leaving its rating on the shares at Neutral. At the time of the note, Indie shares were trading at $3.63, beneath UBS's updated target. Across the analyst community, reported price targets cited in the note span from $4.25 up to $8.00.
As part of the refresh, UBS reduced the target multiple applied to its model to 16 times from 18 times. The firm trimmed its near-term earnings-per-share estimate slightly to $0.27 from $0.28, though it raised its projections for 2028 and subsequent years, reflecting a more optimistic longer-term trajectory in its scenario.
UBS also flagged that five analysts have lowered earnings estimates for the coming period, a sign of broader caution about near-term profitability among coverage analysts, according to InvestingPro. That backdrop informs why UBS retained a Neutral stance even as it upgraded longer-run expectations.
On the operational outlook, UBS expects sequential revenue growth for Indie driven by the ramp of its Tier 1 77GHz radar product. The firm models that the company will exit the year with revenue near $80 million in total, or approximately $55 million on a pro forma basis excluding Wuxi, which UBS expects to be sold within the year.
Margins are central to UBS's view of a recovery. The firm projects gross margin to improve to roughly 53% by year-end as advanced driver assistance systems (ADAS) products gain share. That would represent a marked change from the company's reported negative gross margin of -31% over the last twelve months, underscoring the operational challenges Indie has been working through.
UBS expects operating expenses to run roughly $1 million per quarter higher, aligning Indie with the elevated spending profile that some other analog companies have reported this quarter. The firm models a minimal earnings-per-share loss in the third quarter, with a return to profitability in the fourth quarter.
On a multi-year basis, UBS projects revenue growth from $124 million excluding Wuxi to more than $620 million in 2028. That expansion is modeled to be driven primarily by radar and vision products, with more modest contributions factored in from LiDAR, eMotion3D (the company's recently acquired unit), Qi charging, and Quantum robotics.
Separately, Indie Semiconductor has entered into a commercial partnership with Mahindra & Mahindra Limited to supply driver and occupant monitoring system technology for Mahindra's Electric Origin SUVs, the XEV 9e and BE 6. Under the agreement, indie's CABIN EYE perception software, developed by its emotion3D unit, will be integrated with Mahindra's EyeDentity hardware platform.
The tie-up is positioned to enhance in-cabin monitoring capabilities for those Mahindra electric vehicle models, with the stated goals of improving safety and user experience. UBS highlights the collaboration as evidence of Indie's increasing footprint in automotive technology and its strategic focus on the electric vehicle market by leveraging software assets alongside hardware partners.
In sum, UBS's note combines a shorter-term conservative posture - reflected in a reduced multiple and small EPS cut - with anticipations of material revenue and margin improvement over the coming years driven by radar ramps, software integration, and diversified product contributions.
Summary
UBS trimmed its price target on Indie Semiconductor to $4.25 from $5.00 and maintained a Neutral rating, cutting the valuation multiple and nudging near-term EPS down slightly while forecasting a substantial revenue and margin recovery led by radar ramps, ADAS adoption, and software partnerships.
Key points
- UBS lowered its target multiple to 16x from 18x and reduced 2024 EPS to $0.27 from $0.28, while raising projections for 2028 and beyond.
- Revenue is expected to exit the year near $80 million, or about $55 million excluding Wuxi which is anticipated to be sold within the year; longer-term revenue is forecast to exceed $620 million in 2028, driven by radar, vision, and additional product lines.
- Gross margin is modeled to improve to roughly 53% by year-end from a -31% trailing twelve-month gross margin, with operating expenses running about $1 million per quarter higher.
Risks and uncertainties
- Near-term profitability remains uncertain: five analysts have cut earnings estimates for the upcoming period, and UBS slightly reduced its own near-term EPS forecast - a risk to short-term investor returns, particularly in the semiconductor and automotive technology sectors.
- Operational transition and margin recovery may not materialize as modeled: the firm is projecting a swing from a negative LTM gross margin to about 53% by year-end, an outcome that depends on successful ramp execution and product mix gains in ADAS.
- Asset disposition timing and proceeds: UBS's exclusion of Wuxi from its pro forma revenue and expectation that the asset will be sold within the year introduces execution and timing risk related to overall revenue and balance sheet outcomes.