UPDATE: Stifel Nicolaus Raises PT on Arrow Electronics Following Earnings Call

In a report published Thursday, Stifel Nicolaus analyst Matthew Sheerin reiterated a Buy rating on Arrow Electronics ARW, and raised the price target from $45.00 to $50.00.

In the report, Stifel Nicolaus noted, “Key takeaways post earnings call: Q2 revenue of $5.306bn beat our estimate by $200mn, with $150mn of the upside from electronic components and $50mn from enterprise computing. In components, all regions were at or better than seasonal, driven by Asia (up 15% q/q, partly from strength at chip supplier Mediatek, in our view), and Europe (up 2% q/q) appears to be turning the corner. B:B remains above 1 in all regions, but lead times are still below normal; however, pricing appears to be firming on the higher backlog. Design activity is picking up (+11% y/y), a positive leading indicator. Component guidance was seasonal for N. America and Europe but below seasonal in Asia (due to weakness in mobile, we believe); Computing continued to grow much faster than peers and suppliers on share gains but guidance was weak, due to two fewer selling days in quarter, which could affect late-quarter federal sales, and concerns about the sequestration. Overall EPS guide was significantly higher than our estimate, driven primarily by exclusion of amortization of intangibles (+7 cents) and lower share count due to the buyback program, which has ended. Net-net, we believe Arrow is navigating the cycle well and should see further leverage on cost-cutting and improved GM as the semi recovery continues. We raise estimates and raise our 12-month price target to $50.”

Arrow Electronics closed on Wednesday at $44.93.