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Shares of Cypress Semiconductor Corporation (NASDAQ:CY) have dropped from recent highs, and that sparks an investor opportunity, according to Bank of America.
The company is a “solidly positioned, diversified [semiconductor] company with multiple product cycles, solid earnings leverage, a 3.3 percent dividend and potential M&A benefits,” research analyst Vivek Arya said in a note.
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Bank of America reiterated a Buy on Cypress with a $18 price objective. Cypress announced a $0.11-per-share quarterly cash dividend Tuesday.
5 Reasons For Upside
- Cypress’ business is diverse, Arya said: 32 percent automotive, 29 percent consumer and 23 percent industrial. While the street expects 6 percent year-over-year growth, Cypress is aiming for 7-9 percent annual sales growth in the long term, the analyst said.
- Bank of America is projecting Cypress’ EPS at the end of 2018 to land at $1.44, up from a projected $0.70 EPS at the close of 2017.
- The San Jose, California-based semiconductor company’s first-quarter results saw sales growth beating consensus by 400 basis points, after 100bp beats in the previous two quarters, Arya said.
- “We believe [Cypress] can benefit from the improved pricing environment and scarcity value as a small-cap specialist in a fragmented microcontroller market,” Arya said in Tuesday’s note. Cypress is No. 7 in the microcontroller market with a 5.2-percent share, according to Bank of America.
- Cypress has a 35-percent share in the USB Type-C sector, which could grow into a $900 million market by 2021, according to Bank of America projections, with 50 percent of smartphones adopting the technology.
“There are expectations for Cypress to have won some Type-C design in Apple Inc. (NASDAQ:AAPL)’s upcoming iPhone 8, which creates growth but also volatility for Cypress beginning in [the second half of 2017], typical to all Apple suppliers,” Arya said.
Related links:
Semiconductors In 2017: BlueFin Previews The Year Ahead
Semiconductor Stocks Are Red Hot And Showing No Signs Of Cooling Down
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.