UPDATE: JMP Securities Initiates Coverage on Altera on Appropriate Premium, Positive Outlook
In a report published Thursday, JMP Securities analyst Alex Gauna initiated coverage on Altera (NASDAQ: ALTR) with a Market Outperform rating and $41.00 price target.
In the report, JMP Securities noted, “Altera is the second largest worldwide supplier of programmable logic ICs and it has a consistent track record of outperforming the broader semiconductor industry in terms of growth and profitability throughout its history. Altera is differentiated in terms of pursuing a dual foundry approach for leading edge manufacturing with both Intel (INTC, MP) and TSM (NC); we believe this, plus its pursuit of 64-bit embedded ARM and OpenCL strategies, will drive share gains and EPS upside in the 2015/16 time frame. The stock has underperformed in 2013 (ALTR -10%, XLNX (MO, $55 PT, P/E based) +20%, SOX +33%) due to being leapfrogged by programmable logic market share leader Xilinx in the mid-range upgrade cycle to 28nm. We believe it has closed its 28nm shortcomings and that investors should take advantage of recent weakness and buy the stock ahead of 4G LTE infrastructure upgrade cycles, the emergence of its 64-bit ARM investments, and the likelihood that slowing Moore's Law fundamentals increase its programmable logic value proposition. We model FY14/15 revenue of $1.9B/$2.2B (+10%/+14% y/y, Street $1.9B/$2.1B), non-GAAP EPS of $1.85/$2.05 (Street $1.84/$1.85), and we base our $41 price target on a 20x PE/FY15 multiple that we view as an appropriate premium to our coverage mean in the mid-teens.”
Altera closed on Wednesday at $31.10.
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