Bank Of America Downgrades Atmel Corporation

Bank of America downgraded Atmel Corporation ATML Friday from Neutral to Underperform and maintained an $8 price target.

Analysts led by Vivek Arya believed “the company has good assets, especially in the area of Internet-of-Things (ranked among highest in Gartner’s IoT capability scorecard). However, valuation at 18x/17x 2015/16 PE, and inconsistent execution drives the stock towards the bottom of our scorecard analysis.”

“We believe an inline multiple is justified given our view of ATML's growth in core MCU's and potential in IoT and crypto-memory, offset by continued volatility/overhang from smartphones/tablet touch IC, inconsistent record of results/guidance versus Street expectations, limited likelihood for accelerating buybacks or initiating a dividend, limited headroom for multiple expansion, and increasing 2016 tax-rate that could constrain EPS growth,” according to the analyst note.

Arya acknowledged that “past growth rates appear lower due to exit from legacy divisions and market share losses in its touch controller business...However, our forecast for 2/1.6/6.2 percent sales growth in 2014/15/16 is among the lowest in the semis sector.”

Atmel Corporation recently traded at $8.15, down 0.69 percent.