MKM Analyst Previews Semiconductor Earnings, Share Your Thoughts!

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In a report published Monday, MKM Partners analyst Ian Ing gave readers an earnings preview of the semiconductor industry. Many of the sector's top firms are slated to report this week. Below is a summary of his positions on three of the big players.
  • Analog Devices, Inc. ADI: Maintain Neutral rating, lower price target from $61 to $58. EPS estimate of $2.91.
  • Semtech Corp. SMTC: Maintain Buy rating, lower price target from $32 to $28. EPS estimate of $1.15.
  • Marvel Technology Group MRVL: Maintain Buy rating, maintain price target at $61. EPS estimate of $0.78.
ADI
Ing admitted that he was "most cautious" ahead of Analog's earnings report. Although the "widely expected AAPL Force Touch win" seems like a promising boost, he believes that the markets have already priced in the value of that contract. Meanwhile, he suggested that disappointment could potentially stem from "unfavorable gross margin mix" and factory utilization declines.
SMTC
Ing highlighted several positive signs for SMTC. He noted that the company's recent 8 percent payroll reduction would lead to an estimated $20 million in annual savings. He also mentioned that exposure to Samsung has declined recently -- down to 8 percent of April sales. SMTC also has several upcoming product cycle launches, which should provide upside, according to Ing. Nevertheless, there are also several risks. Ing said that the company's small-cap structure makes it especially sensitive to revenue pressures. Its "weakness across all Android tiers" was another concern. Nevertheless, the analyst maintained that "its robust design win pipeline should begin to drive outperformance."
MRVL
Ing held his EPS estimates for Marvel underneath the Street consensus, citing headwinds in the firm's major markets. Still, he thinks that the company would be relatively insulated from low guidance. He is looking for the stock to trade higher after the conference call as several key overhangs, including litigation costs and soft demand of Marvel's storage products, could potentially be removed.
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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsAnalog Devices Inc.Marvell Technology GroupSemtech Corporation
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