UPDATE: Goldman Sachs Initiates Buy on M/A-COM Technology Solutions Holdings on Margin Expansion

Goldman Sachs initiated coverage on M/A-COM Technology Solutions Holdings MTSI with a Buy rating and a price target of $16. Goldman Sachs commented, "We are positive on M/A-COM's stock given that: (1) We estimate M/A-COM can expand gross margin from the mid 40% range currently to the low 50% range in the next few years driven by new product introductions in the comm and aerospace & defense end markets. (2) M/A-COM only has about 10% of sales tied to defense, limiting near-term downside potential from the US fiscal cliff but representing an intermediate-term opportunity to gain share. (3) Valuation is attractive in our view at just 10X normalized EPS and 5X CY13 EBITDA." M/A-COM Technology Solutions Holdings closed at $11.57 on Wednesday.