UPDATE: Bank Of America Downgrades Linear Technology

Bank of America downgraded Linear Technology Corporation LLTC Friday from Buy to Neutral and raised its price target from $45 to $49.

Analysts led by Vivek Arya commented that “while the company has been managed well and has superior core assets driven by heavy R&D spending (18 percent of sales, higher than peers), we believe the valuation at 21x/19x 2015/16E PE (including stock comp expense) reflects much of the upside.”

“Operating leverage could be limited from current levels, and require stronger topline growth to >$400mn/q, making EPS growth rate above mid-single digit difficult,” according to the analyst note.

Arya observed that “LLTC ranks in the middle of our coverage universe largely driven by dearth of beat and raise qs in the past."

The $49 price target was based on “20x FY16E PE or ~12x EBITDA, right at the mid-point of the 5 year valuation range.”

Linear Technology recently traded at $45.84, down 0.65 percent.