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TSEM: Reducing Estimates Due to Panasonic Renegotiation

By Lisa Thompson



We are lowering estimates due to new terms in TowerJazz’s (TSEM) agreement with Panasonic that are expected to go into effect after March 31, 2019. These terms will reduce the amount of revenues paid by Panasonic to the joint venture and we expect that to amount to be approximately $20 million dollars per quarter starting in Q2 2019. We have adjusted our model accordingly and now are looking for revenues of $1,278 million in 2019 and a non-GAAP EPS of $1.33 per share down from $1,300 million and $1.48 per share estimates for 2018. As a result the price target has been dropped to $21.80 per share. The industry also continues to see weakness in smartphone sales that may affect 20% of TowerJazz’s sales and this is a reason for cautious forecasts.

We expect to get further information when the company reports its Q4 2018 on or near February 21, 2019.

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