UPDATE: JMP Securities Initiates Coverage on Xilinx with Market Outperform Rating, $55 PT on Market Leader Position

In a report published Thursday, JMP Securities analyst Alex Gauna initiated coverage on

with a Market Outperform rating and $55.00 price target. In the report, JMP Securities noted, “Xilinx is the world's largest supplier of programmable logic ICs with a consistent track record of outperforming the broader semiconductor industry in terms of growth and profitability. The stock has outperformed its smaller peer Altera in 2013, but has lagged the broader SOX performance (XLNX +20%, ALTR (MO, $41 PT, P/E based) -10%, SOX +33%) and we see this as an opportunity to buy the stock at a mid-teens multiple at a time when revenue growth is accelerating into the high teens and potentially beyond. Xilinx currently enjoys the benefits of gains due to a successful 28nm product transition in mainstream applications that led to share gains in wireless infrastructure, among other areas, and we believe the company is well positioned to benefit from a rising tide of 4G LTE equipment spending in 2014. We also see Xilinx benefiting longer term from a combination of first-mover advantage to embedded ARM and the slowing of Moore's Law that we believe increases the value proposition of field programmability. We model FY14/15/16 total revenue of $2.4B/$2.6B/$2.9B (+10%/+11%/+8% y/y, Street $2.4B/$2.6B/$2.8B) to drive non-GAAP EPS of $2.57/$2.90/$3.05 (Street $2.57/$2.83/$2.88) and we base our $55 target on an 18x PE/FY16 multiple we view as an appropriate 1x PEG to its present rate of growth and a warranted premium to our coverage universe mean in the mid-teens.” Xilinx closed on Wednesday at $43.06.