Equity Research Data Analyst
Marking my entrance into the financial sector, I joined Bloomberg directly after graduating from Penn State. This page details the work and experience from that role.
Financial analyst with year(+) at Bloomberg Intelligence, combining deep technical knowledge with data-driven insights to deliver actionable intelligence on technology and telecommunications sectors.
Bloomberg Intelligence
Equity Research
Significant analyses and research conducted during my time at Bloomberg Intelligence.
Comprehensive analysis of ams-SW, a key Apple semiconductor supplier for facial recognition technology.
Ams continues to see optical sensing as its highest volume opportunity through 2020. According to IHS, global shipments of 3D facial sensors are expected to reach 370 million units by 2021 from 32 million units in 2017.
Ams is targeting a shift in business revenue to 60% consumer and 40% non-consumer segments, with automotive applications representing a significant opportunity.
Led a comprehensive analysis of the semiconductor supply chain with a focus on identifying critical components and potential bottlenecks affecting major technology companies.
Developed a proprietary model to quantify the revenue impact of emerging technologies on established semiconductor companies.
Comprehensive technical and analytical capabilities developed through Bloomberg Intelligence and Equity Research roles.
Ams' better than expected 2Q results and strong 3Q sales outlook reinforces our positive view of the company's competitive positioning with Apple in 3D-Sensing ahead of the pending iPhone launch. Revenues are up 18% from the same quarter of 2017. Due to the underutilization of production facilities, gross margin came in at 9%, the lowest ever reported.
Ams's Q2 results represent a stable non-Apple core business, which could add a favorable boost to earnings if expanded into 2020. This will come from capitalizing off of Android customers and winning significant product designs in the automotive industry. (08/10/18)
Highlights From Recent Results
Ams has placed a large bet on the growth and adoption of 3D technology. So far, 3D sensing has proved to be a well-timed investment strategy. From 2016, total revenues by segment have made a large shift from equal to overweight consumer & communications. The consumer & communications segment of total revenues has grown from 51% to almost 73%. We can attribute this 22% increase to large customers such as Apple who are leading the way in 3D implementation.
To sustain growth in this market, ams must continue to win product designs from its primary customer. Demand for 3D technology provided an additional EUR 200 million in total revenues for Q4 of 2017. (08/10/18)
Ams's gross margin dropped from 50% in 2016 to 9% in Q2. Ams attributed the drop in gross margin to acquisition-based cost and the consumer side, placing the blame on larger programs and larger customers.
Operating margins have also suffered, falling from 33% in Q4 of 2016 to -29% fueled by higher expenses and a slowdown in seasonality. According to ams, 30% yearly gross margins are here to stay, which can pose a risk to profitability if they are unable to sustain other parts of the business. (08/10/18)
Looking past a weak second quarter, relative to Q1, ams has indicated that 2H18 ramp-up will produce strong revenue results led by optical sensing products. 3Q 2018 revenues are expected to reach $450 million to $490 million, up 78% to 94% sequentially and 46% to 59% year-on-year. So far, ams has driven revenue by feeding off of Apple's high demand for 3D sensors. Higher revenues are not without risk, margins have plummeted and profitability has lowered sequentially. Going forward, 2H18 revenues should provide a much needed boost to EPS.
Consensus is implying ams will continue to provide a large share of Apple's 3D sensing needs through 2020, which will continue to fluctuate as more suppliers enter the market. (08/10/18)
Ams continues to see optical sensing as its highest volume opportunity through 2020. According to IHS, global shipments of 3D facial sensors are expected to reach 370 million units by 2021 from a mere, but still impressive, 32 million units in 2017. The demand for 3D sensing is bolstered by its use in handset markets, most notably, iPhones. (08/10/18)
Through 2021, consensus is implying ams will continue to supply $7.5 per device worth of content for Apple to help implement front-facing 3D sensing. If ams can hold on to market share at current ASP, they should be well on their way to beating revenue expectations for the next 3 years. (08/10/18)
If Apple were to introduce just 30% of iPads with face ID for FY20, it could provide an added $90 million in revenues for ams. As with fingerprint authentication, Apple introduced this technology with the latest iPhone and then applied it to all next generation devices, including iPad. (08/10/18)
VCSELs (vertical-cavity-surface-emitting-lasers) are a key component for 3D sensing, which help push light through the dot projector. A key edge that VCSELs have over other lasers is that they can be tested at several phases throughout the production process allowing suppliers to check for any quality or production issues. EELs cannot be tested until the end of its production cycle. (08/10/18)
VCSELs are estimated to cost $6-7 per phone. Lumentum is the current supplier of VCSELs for Apple, however, Finisar was recently awarded US$390 million as a prepayment for future orders. The recent purchase of Princeton Optronics, a developer of VCSELs, could open the door for ams to capture market share. Other VCSEL suppliers such as Phillips Photonics & Finisar are coping with technological challenges that allow successful integration of smartphones. Princeton Optronics differentiates itself by having developed fully optimized VCSELs for over 10 years, formally funded by the US military.
If ams can capture 20% of VCSEL market share from Apple, it would translate to an additional $110 million in revenues FY20. (08/10/18)
Although Apple has had a two-year head start, Android providers are participating in the growing trend of 3D implementation. Ams announced an impressive win for its VCSEL array business, supplying 3D technology for Xiaomi's new Mi8 smartphone, solidifying itself as the first Android platform to implement user facial recognition. Xiaomi's Mi8 sold out within a minute of its release which could imply more orders from ams for VCSELs, which may not be priced in. With 10% market share, Xiaomi is the fourth-largest smartphone maker in China. (08/10/18)
Providing 20% of VCSELs to Apple, 30% of iPad content, and 10% of Android market share would translate to a total revenue number of $2.85 billion FY20. A 6% upside may not sound exciting, but this doesn't include the added benefit that may come from the automotive industry which ams forecasts to grow 49% through 2020. (08/10/18)
Ams is looking to shift business revenues by segment to 60% consumer & 40% non-consumer, which will largely depend on the growth of non-smartphone revenue. According to IHS, the market for automotive LIDAR systems will grow from $290 million in 2016 to $2.7 billion by 2026. (08/10/18)
Ams expects a large part of its future revenue to come from the growth of other segments such as automotive, but so far these expectations have yet to materialize. With forecast of 49% through 2020, ams plans to supply the LIDAR technology used in autonomous vehicles and claims they are seeing growing interest from industry leaders. The autonomous vehicle industry faces significant headwinds such regulatory footings, technical challenges, and timing of implementation. (08/10/18)
Over the past 3 years ams has made a number of strategic acquisitions such as Heptagon, KeyLemon and Princeton Optronics to remain competitive in the optical sensing space. Heptagon carried a price tag of about $850 million while Princeton Optronics was acquired for $75 million. Heptagon, a high-end supplier of optical packaging and Princeton Optronics, a developer of high-performance VCSELs, have turned out to be critical investments. (08/10/18)
Both acquisitions allow ams to provide end-to-end solutions in accelerating segments such as 3D sensing and spectral sensing. Although Heptagon was accretive, underutilization of its facilities have placed a drag on margins. Ams has also distinguished itself with the recent purchase of KeyLemon, which focuses on developing biometric software for facial recognition. It's yet to be seen how this acquisition will affect bottom line but, going by Ams's track record, they have proven the ability to successfully integrate multiple businesses. (08/10/18)
Ams, Lumentum, and Finsar are all expanding capacity, which could imply a large ramp up of shipments in the 2H of 2018. Ams has shown its competitive advantage by tripling its market cap within a year to almost $6 billion thanks to various acquisitions driving revenue growth.
Lumentum has solidified itself as a key supplier of 3D technology with revenues jumping 66% in the second quarter of 2017 year-on-year driven by strong demand from Apple. A $390 million investment into Finsar for VCSELs also show just how far Apple is willing to go to dominate the 3D supply chain. (08/10/18)
Cumulatively, if ams is able to supply VCSELs for Apple devices, capture Android market share, and grow their core business at least 10%, the market could be under-pricing ams by $1.6 billion dollars over the next 4 years. (08/10/18)
Historically, ams has traded around 30x and sometimes as high as 80x. If we apply just a 12.5x P/E on a forecasted EPS of $8.20, ams should be trading at $102.44 FY20. A 30% increase in share price may be worth keeping an eye on.
At a time where Apple suppliers are dropping in valuation, ams continues to demand a steep premium. (08/10/18)