UPDATE: Piper Jaffray Reiterates Overweight Rating, Lowers PT on Freescale Semiconductor
In a report published Friday, Piper Jaffray & Co. reiterated its Overweight rating on Freescale Semiconductor (NYSE: FSL), but lowered its price target from $22.00 to $13.00.
Piper Jaffray noted, “Our thesis for FSL is based on earnings growth driven by margin expansion. While gross margins for Q2 were in line with guidance, gross margin was boosted by 150-170bps due to the sale of IP. Going forward we are lowering our gross margin assumptions on lower utilization, lower revenue and a weaker mix of products. We cut our gross margin assumptions for CY12 by 160bps and CY13 by 330 bps. Based on the company's commentary, our estimates should be conservative, but we are waiting to see evidence of margin expansion before modeling expansion. The new CEO has initiated a strategic review and will likely find opex reductions. We are lowering our price target to $13 from $22 on lower estimates, but are maintaining our OW rating as we see little risk to our estimates and end market demand should start to improve.”
Freescale Semiconductor closed on Thursday at $10.21.
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