UPDATE: Oppenheimer Downgrades Cirrus Logic on Lack of Valuation Support
In a report published Monday, Oppenheimer analyst Rick Schafer downgraded the rating on Cirrus Logic (NASDAQ: CRUS) from Perform to Underperform.
In the report, Oppenheimer noted, “We are downgrading shares of CRUS to Underperform from Perform. Customer/product/end-market concentration, as well as valuation, drive our incremental caution looking forward. Top customer Apple, ~80% of sales, is likely to dominate CRUS' top line for the foreseeable future. A dearth of new features/functionality to supply Apple, as well as increasing margin pressure at that OEM, leaves CRUS susceptible to growing ASP/margin degradation. ASPs/GMs at AAPL have already dropped from ~$4+/50%+ to ~$3/45%. We expect, further pressuring the model, CRUS to become a full 35% tax-payer in 1HCY15, materially impacting FCF/EPS. We remain wary of CRUS' content trends at Apple and highlight the lure of integrated audio to OEMs in an increasingly margin-pressured market. We see little valuation support here.”
Cirrus Logic closed on Friday at $19.59.
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