Vishay Intertechnology (VSH)- Too Early to Celebrate

Short-term risks loom despite turnaround initiative

In July, we warned our institutional clients that Vishay Intertechnology (VSH) was at risk of a disappointing expectations due to rising inventories and unsustainably low depreciation expense. A week later, the company reported a small, second quarter earnings beat but missed revenue estimates, dinging the stock and setting the stage for the company to underperform the semiconductor sector since then.

The setback prompted the company to initiate a new growth and restructuring plan. That initiative, plus news that it is becoming a supplier to Nvidia caught the market’s attention and the stock has recently bounced off its lows. While we see the company’s growth plan as a long-term positive, we also see several risks remaining in the short run that could lead to some near-term disappointment.

We explore these below.

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