STM - Infineon Lagging Into A Sector Peak And Order Turbulence

• Infineon had a mixed fiscal third quarter; interruptions at two fabs drove a below-expectations revenue number, but order growth was very strong and gross margin was better than expected.
• Lead times are going to peak at some point, and then correct as normalized demand and improving supply lead customers to cancel excess orders.
• That lead-time normalization is a bigger threat to sentiment for Infineon than to its financials, as the company has logged an impressive order book over the last year.
• Infineon offers an "okay" return today, but if lead-time normalization rattles the sector like it has in past cycles, there should be some buy-the-dip opportunities.

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