FBR Capital Downgrades National Semiconductor To Market Perform, Raises PT To $25

FBR Capital Markets has published a research report on National Semiconductor Corporation NSM and has downgraded the company from Outperform to Market Perform. In the report, FBR Capital writes, "We are downgrading shares of NSM from Outperform to Market Perform and raising our price target from $20 to $25 following TI's recently announced intent to acquire National Semi for $25 per share, or a 78% premium to National's prior closing price. We think this deal makes sense, with TI the only likely bidder and the best strategic fit for National Semi. The $6.5B purchase price, which TI will fund with about $3B of its own cash and about $3B−$4B of new debt, represents a P/E of about 19x (2011) and 17x (2012), not inexpensive considering National's growth rate, but not ridiculously expensive either considering the manufacturing synergies and cost reductions that TI is likely to achieve in coming years. We do expect this deal to close without issue. Net, TI's acquisition of National should allow the firm to build scale, grow its product offering, improve its manufacturing efficiencies, and accelerate EPS growth, all at a fair (but not inexpensive) price. Within analog, we prefer shares of Maxim (MXIM – Outperform) over TXN given that firm is arguably faster growing and trading at the same P/E multiple (after adjusting TI's baseband contribution)." FBR Capital has also raised the price target from $20 to $25 on National Semiconductor, which closed yesterday at $24.39.