Intersil Initiated Neutral At MKM

A turnaround at Intersil Corp ISIL finally appears to be on track, MKM Partners’ Ian Ing said in a report. He initiated coverage of the company with a Neutral rating and a fair value estimate of $15.50.

Analyst Ian Ing commented that although new product cycles were interesting, the current valuation appeared full, while adding, “We look for valuations to be better supported by sustained outperformance vs. peers, driven by new product cycles beyond 2H16, to turn more constructive on shares.”

Intersil’s product portfolio has become increasingly competitive and is gaining share, as the company aims at evolving power management requirements in the automotive, servers, and smartphones arenas.

Although the power management segment is crowded with significant players, Intersil’s strategy is to anticipate emerging power management and energy efficiency requirements. “We view energy efficiency as an increasingly important requirement for both portable consumer and non-consumer applications,” Ing wrote.

Gradual Increase In Demand

The analyst mentioned that while valuation appears full, new demand could be gradual. He explained, “Current year strength largely depends on a return to more normal demand patterns in tablets, Skylake-based notebooks, and industrial analog. A five-fold content increase in servers via digital power could begin gradually in 2017. The timing of end-market recoveries (following some inventory digestion) remains uncertain.”