Morgan Stanley Sees Growth in Core Markets as Intact for Linear Technology
In a report published Thursday, Morgan Stanley analyst Craig Hettenbach reiterated an Overweight rating and $54.00 price target on Linear Technology (NASDAQ: LLTC).
In the report, Morgan Stanley noted, “Results were below expectations due to a drop in the non-core consumer business (2% of sales vs. 3% last quarter). This miss was further compounded by positioning in the stock—and broader analog group—that up until recently had been a beneficiary of flows out of high-flying tech stocks. We remain very positive on the growth drivers in its core industrial (43% of sales) and auto (20%) markets and as such are buyers of the pullback.
"In just 5 years, auto has increased from 9% of sales to 20% and significant growth in BMS should help drive this to 25%. On the flipside, we are disappointed in Linear's messaging of its capital structure (debt free), although even here we see potential optionality for cash returns.”
Linear Technology closed on Wednesday at $45.07.
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