CEVA Inc Surges Amid Oppenheimer Upgrade

Oppenheimer upgraded CEVA Inc. CEVA Thursday from Perform to Outperform and established a $19 price target.

Analysts Andrew Uerkwitz and Martin Yang commented that in the smartphone market 1) the primary growth area is low-to-mid-end handsets in developing markets and 2) due to hyper-competitive pressures emerging in 2015, we believe OEMs will look for ways to drive down costs without compromising quality.

The analyst report claims that CEVA can take advantage of both of the above trends.

Uerkwitz observed “that CEVA's primary customers Spreadtrum and Leadcore serve the fastest growing markets...We see Samsung and MediaTek as opportunities as they work to streamline their product offerings, ultimately using CEVA's technology more than in the past. Bottom line: CEVA is re-entering a multi-year growth cycle.”

The analysts noted “that the growth drivers we outline will take time to develop. With everything in place, we are confident 2014 will be the bottom and expect 1H15 to be the inflection point as we enter a long growth upcycle. We introduce our 2016 EPS estimate of $0.64, up from $0.36 in 2015.”

CEVA Inc. recently traded at $16.88, up 6.30 percent.