Melexis grew 3% while NXP grew 13% and Allegro 15% in cars, and two banks cut its targets

Melexis reported a better quarter and was punished for it. On October 28 the Belgian designer of magnetic sensors and motor-driver chips for cars posted third-quarter sales of EUR 223.7 million↗, up 4% year on year, gross margin of 40.7% and net profit up 14% at EUR 31.3 million ¹.

Earnings per share of EUR 0.78 still landed under the EUR 0.86 average of four analysts' estimates ². Chief executive Marc Biron called the quarter "in line with expectations" ¹. The stock fell 3.5% on the day↗ ⁴ and closed at EUR 56.10 on October 30, 35 cents above its 52-week low ³¹⁰. The next morning two banks cut their price targets.

Three against thirteen and fifteen

Deutsche Bank analyst Robert Sanders cut his target from EUR 75 to EUR 65↗ and kept Hold, on simple arithmetic: Melexis grew 3% at constant currency, while NXP▼−2.11% — NXP, down 2.11 percent today, the far larger Dutch automotive chipmaker, grew its car business 13% on the S32 in-car computing platform, and Allegro▼−6.76% — Allegro, down 6.76 percent today, the US sensor-chip rival, grew automotive sales 15% in its June quarter ⁵. NXP's own release confirms the 13%, on automotive revenue of $2.07 billion↗ ⁸.

Sanders called market-share loss and margin pressure in lighting chips a persistent headwind, and noted the awkward fact that consensus already assumes 9.3% growth for Melexis in 2027, a rate the company has yet to demonstrate ⁵.

The design wins follow the factories

Biron told Reuters↗ that China now books more new design wins than Europe ⁷. A design win is the slot a chip earns inside a car program, usually years before volume ships. Jefferies▼−6.16% — Jefferies, down 6.16 percent today put numbers on the shift: China was Melexis's strongest region with record third-quarter revenue, while Europe's share of sales fell from 31% to 27% ⁶.

The company signed a master purchase agreement with the Chinese carmaker BYD and shipped its first chip made through a China-localized manufacturing model ¹. Asia-Pacific took 65% of quarterly sales, up from 61% a year earlier ².

The safety case, and the leak in it

Jefferies kept Buy and cut its target from EUR 94 to EUR 78↗, valuing Melexis at 18.9 times expected 2027 earnings ⁶. Because the company barely touches AI data centers, the bank called it a relatively safe way to stay invested in semiconductors while the AI trade is sold off, with a second leg in humanoid robotics: position sensors and motor drives for the Optimus robot program, though revenue only arrives from 2028 ⁶. The trailing EUR 3.70 dividend yields 6.37%↗ ¹⁰.

Against that, X-FAB▼−6.12% — X-FAB, down 6.12 percent today, the German specialty foundry for auto and industrial chips, reported third-quarter bookings up 38% at $224.7 million, a two-year high, and its chief executive Damien Macq said destocking had stopped weighing on orders↗, even as automotive revenue was still down 19% at $119.1 million ⁹. X-FAB's bookings show the car-chip cycle is already turning, so Melexis growing 3% is no longer explained by the cycle ⁹.

What decides it

Full-year results land on February 3, 2027 ¹. Melexis guided second-half sales of EUR 445 to 455 million ¹, and consensus wants EUR 949.5 million in 2027, 9% growth↗ ³. Two numbers settle the argument between EUR 65 and EUR 78: whether China's record repeats this quarter, as the company says its orders point to ¹, and whether Europe's 27% share stops falling. Thirteen analysts still average EUR 71.23 ⁵. The 6.37% yield is the market's price for holding that question open until February ¹⁰.