UPDATE: Oppenheimer Downgrades Cirrus Logic to Underperform on Lack of Valuation Support

In a report published Monday, Oppenheimer analyst Rick Schafer downgraded the rating on

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.