AMSSY - ams-OSRAM Undergoing A Painful Reset But Better Days Should Lie Ahead

• ams-OSRAM is facing fairly weak near-term growth prospects as it absorbs the loss of 3D sensing-related revenue at Apple and pares away low-margin legacy OSRAM business.
• Android OEM content is growing, though, and there are still attractive opportunities in AR/VR, microLEDs, auto content (LEDs and LiDAR), and industrial/medical based on ams-OSRAM's core sensing/emitting expertise.
• Margins could improve as early as 2023 and improved 3D content on Android phones, microLED launches, and auto LiDAR could drive revenue re-acceleration in 2024-2026.
• The upcoming Capital Markets Day could be an opportunity to highlight underappreciated opportunities in areas like industrial/medical and reassure the Street about longer-term growth opportunities.
• Long-term revenue/FCF growth of 4% and 8% and near-term operating margins of under 11% can support a higher share price.

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