FBR Capital Markets Maintains Outperform on Fairchild Semiconductor After Soft 4Q Earnings

FBR Capital Markets has published a research report on Fairchild Semiconductor

after the company reported "soft" 4Q earnings. In the report, FBR Capital Markets writes, "Encouragingly, Fairchild said the supply chain is reducing inventory (and is now undershipping distributors), the firm had a positive book-to-bill in January, orders are inflecting upward, and 2Q11 sales and gross margins are both expected to grow QOQ. This suggests 1Q12 is the fundamental trough; it is a lower trough than we had expected due to macro-driven inventory reductions, and this sets up for a potential 'snap-back' in 2H12. We still believe that Fairchild can ramp revenues back towards "end-consumption" levels of $400M per quarter reasonably soon, though visibility here still remains low. Also, business volatility (cyclical revenue, margin, or inventory swings) has declined versus previous cycles, owing to management's execution. We maintain our Outperform rating but cut our 2012 pro forma EPS estimate from $1.15 to $0.65, 2013 from $1.25 to $1.00, and our price target from $18 to $16, a 15x target P/E multiple (2H12, including stock compensation)." FBR Capital Markets maintains its Outperform rating and $16 price target on Fairchild Semiconductor, which is currently trading down $0.45 from yesterday's $14.53 closing price.