Before the bell: c’est la vie

The French government has fallen, raising concerns over interest rates in neighboring countries. X-Fab hosts its investor day.

It’s official. Last night, the French government collapsed at one of the worst possible times for the country. Not only is there no approved budget heading into the year-end—leaving financial markets ready to target France—but under Article 12 of the constitution, new elections cannot be held until summer unless Macron resigns and calls for presidential elections. As a result, Belgium, France, and Germany all find themselves without a government just as Trump prepares to take office.
Markets, however, remain unshaken, with the Euro Stoxx 50 climbing 0.8% and the S&P 500 gaining 0.6%. The latter was buoyed by Fed Chair Jerome Powell’s remarks that the U.S. economy remains remarkably strong, urging caution on further rate cuts.

In corporate news, the earnings season is winding down as companies prepare for the holiday season. The most shocking event yesterday was the shooting of the CEO of UnitedHealth’s insurance division during an investor day. Meanwhile, Salesforce surged 11% following better-than-expected quarterly results. Proximus and Ageas both trimmed their dividends; after adjustments, Ageas gained 3% and Proximus 4.8%. Eyes now turn to the delayed OPEC+ meeting. Disagreements among member nations make it difficult to strike a deal to raise oil prices, and a failed meeting could drive oil prices lower.

Sanctions squeeze corporate earnings

The semiconductor sector continues to face pressure, as evidenced by Synopsys’ latest results. Earnings per share rose sharply to 3.40 dollars, up from 3 dollars last quarter. However, forward guidance was concerning. Macro headwinds in the automotive sector are expected to reduce next quarter’s earnings to 2.77–2.82 dollars per share, with revenue falling from 1.63 billion dollars to between 1.435 billion and 1.465 billion dollars. This reflects challenges posed by Chinese export controls on chips—an issue likely to worsen under a Trump presidency.

From 2026 to 2030

“Predictions are often worth less than the paper they’re written on,” a saying often repeated in my family. A glance back at past forecasts shows how far reality often deviates from plans. X-Fab’s projection to achieve 1.5 billion dollars in revenue by 2026 is no exception. During yesterday’s investor day, the group tempered expectations, shifting the target to 2030. With a gross margin of 35%, X-Fab anticipates achieving EBITDA of 525 million euros—almost equivalent to its market capitalization as of yesterday.
Investors are optimistic, focusing instead on the revised target of 1.05 billion dollars in revenue and 315 million euros in EBITDA by 2026. While the company currently faces headwinds in the automotive sector, these are not expected to last. Our view? Those patient enough to wait until 2030 likely won’t regret investing in X-Fab.

Did you know…

that Greek bonds are currently considered less risky than French government bonds? Yesterday, the 10-year yield on Greek government bonds was around 2.90%, comparable to French bonds. French interest rates are expected to rise further today.

This article was translated from Dutch and was originally published on Spaarvarkens.be.