UPDATE: FBR Capital Markets Downgrades Fairchild Semiconductor International to Market Perform, Lowers PT Following Weak Results/Guidance

In a report published Friday, FBR Capital Markets analyst Christopher Rolland downgraded the rating on Fairchild Semiconductor International FCS from Outperform to Market Perform, and lowered the price target from $16.00 to $14.00. In the report, FBR Capital Markets noted, “Fairchild (FCS) reported weak results and guidance, significantly below the Street, as it appears yet another company has fallen victim to falling PC and flagship smartphone shipments. While mobile has been a key part of both the revenue and gross margin story it now appears that segment is slowing as Samsung may have pumped the ‘production brakes' and caused a backup of components in the channel. Additionally, we would have expected a higher sequential guide for MCCC in 3Q13 as the next iPhone may launch. We do not yet know if this muted guidance owes to lower Samsung builds (and channel build), weaker iPhone expectations, a later-than-usual launch of Apple's flagship phone, but regardless has clearly underwhelmed our expectations. While high-end mobile has powered Fairchild's story over the past few years, the company has lower representation in emerging market handsets, the last bastion of strength. While many other cyclical semiconductor companies reduced headcount, consolidated fabs and cut operating expenses during the trough phase of the cycle, Fairchild's growth drivers allowed it to avoid this difficult measure. Now, the company has significantly less operating leverage than its comparables and may just be beginning a cost-cutting effort of its own (which we applaud). However, this may come too little too late as peak margins this cycle may not have time to play out.” Fairchild Semiconductor International closed on Thursday at $12.77.