LEM (AO) | Hold | Q1 preview: book-to-bill remains above 1x; strategic review in focus

Research evidence excerpt

LEM (AO) | Hold | Q1 preview: book-to-bill remains above 1x; strategic review in focus

LEM Hold | Target Price: CHF500.00

However, the CHF appreciated significantly again in FY 2025/26, triggering revenue compression in reported currency (-6.3% YOY

in CHF vs -0.2% YOY in constant currencies). As LEM earns in EUR, USD, and CNY but reports in CHF, we expect a still significant FX

headwind in Q1.

Chart 1:Quarterly orders and sales

Chart 2:Quarterly sales and margins

Source: Company data, Kepler Cheuvreux

In terms of segments, Automation/data centre is set to be the strongest-performing segment, after growing 10.2% YOY in constant

currency FY 2025/26. HVAC and power measurement customers tied to data centres remain the demand drivers.

Management estimates that the broader current-sensing market for data centres could reach about CHF100m in five to six years.

This is a market-size estimate, not a LEM sales target.

Data-centre demand supports both Automation and EDHP. LEM specifically identified data-centre cooling and high-voltage

infrastructure in Automation, and power-supply applications in EDHP.

Automotive weakened in H2 in China and the Americas, with Europe a partial offset. China's dynamics (structural pricing

pressure, not cyclical) remain a risk.

Chart 3:Quarterly sales YOY by application area Chart 4:Quarterly sales YOY by geography

Source: Company data, Kepler Cheuvreux Source: Company data, Kepler Cheuvreux

Peer indicators are constructive but mixed. Allegro is guiding strong Q1 growth after recent strength in xEV, ADAS and data

centres. Melexis expects broadly flat H1 sales but stable margins, followed by sequential H2 growth. Infineon has raised its FY

2026 outlook as AI data-centre and broader industrial demand improve.