Cirrus Logic, Inc. CRUS reported a marginal beat in its fiscal fourth quarter Wednesday and announced fiscal first-quarter revenue guidance in-line with expectations.
Although the company continues to face near-term challenges, its customer diversification is encouraging and there are signs of improvement in the smartphone market, according to MKM Partners.
The Analyst
Ruben Roy maintained a Buy rating on Cirrus Logic and raised the price target from $42 to $55.
The Thesis
Cirrus Logic reported quarterly revenue of $240 million, slightly ahead of management’s guidance. Revenue declined 21 percent year-over-year and 26 percent sequentially, Roy said in a Thursday note. (See his track record here.)
While Apple Inc. AAPL contributed 66 percent of total revenue in the fourth quarter, revenue from the iPhone maker declined about 34 percent year-over-year in dollar terms. Cirrus Logic signed on a new customer that accounted for 15 percent of its quarterly revenue, the analyst said.
The semiconductor manufacturer guided to first-quarter revenue of $200-$240 million. At the midpoint of $220 million, this is in-line with the consensus estimate.
The revenue guidance implies a much lower 14-percent year-over-year and 8-percent sequential decline, Roy said. While reflecting lower expectations for smartphone unit sales, the revenue projection incorporates content gains with amplifiers into recently introduced smartphones, he said.
Cirrus Logic continues to expect content growth to fuel revenue growth in a flat smartphone unit market, the analyst said. The revenue guidance could prove conservative given recent signs of stabilization in the smartphone market, he said.
Despite the near-term challenges, Cirrus Logic seems well-positioned to “benefit from longer-term content gain opportunities, both in the smartphone market as well as in a broader set of end market applications,” Roy said.
Good execution, a solid cash position, strong cash generation metrics and customer diversity are among the company’s positives, according to MKM Partners.
Price Action
Cirrus Logic shares were up 0.71 percent at $48.36 at the time of publication Thursday.
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