Benchmark Company Reiterates Buy on Entropic Communications Following Mixed Results

In a report published Wednesday, Benchmark Company analyst Gary Mobley reiterated a Buy rating and $6.00 price target on

. In the report, Benchmark Company noted, “After the market close on Tuesday, Entropic issued mixed news. On one hand, the company announced that 2Q13 revenue came in at the low end of the previous guidance range of $70-$73 million (vs. our estimate of $71.5 million and consensus of $71.6 million). Despite the $1.5 million revenue shortfall, EPS is still expected to be $0.00, in line with prior guidance. The company most likely generated ~50bp of gross margin upside and likely spent less than anticipated on tape-outs. The company also announced a 10% workforce reduction (70 employees) and a comprehensive restructuring. The opex cutbacks are undoubtedly influenced by recent top-line softness and the desire by management to keep the company profitable. In addition, the cuts also represent a desire to streamline a company that has recently made several acquisitions (PLX design team, Mobius, etc.) and a company that wants to redirect R&D efforts to diversify away from the discrete MoCA chip market.” Entropic Communications closed on Tuesday at $4.32.