Despite Apple Weakness, Cirrus Logic Is Still A Buy

Stifel's Tore Svanberg has maintained a Buy rating on Cirrus Logic, Inc. CRUS, while raising the price target from $38 to $42.

Svanberg mentioned that against the backdrop of the impending launch of Samsung's Galaxy S7, there have been news reports suggesting that QUALCOMM, Inc. QCOM was likely to regain some of its lost share of the previous generations of Samsung's flagship model, where Cirrus Logic had claimed 100 percent share.

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However, following meetings with management at the Mobile World Congress in Barcelona, Spain, the analyst believes that there could be some share split with Qualcomm, with a possibility of Cirrus Logic retaining about 60 percent.

Although the company's recent results and guidance imply weakening demand for some portable audio products, especially those related to Apple Inc. AAPL, Svanberg believes that "there are several strong product cycles with its largest customer and content growth in existing and new customers."

Despite expectations of iOS continuing to drive most of Cirrus Logic's revenue growth, given the size of the company's Apple related business, the analyst believes that non-iOS devices would also help drive growth in FY17.

"We believe Cirrus continues to see strong demand for its smart codecs and is capturing additional content in multiple new handsets," Svanberg added.