Morgan Stanley Sees Double-Digit Growth, Solid Operating Leverage For Linear Technology

In a report published Wednesday, Morgan Stanley analyst Craig Hettenbach reiterated an Overweight rating and $54.00 price target on

. In the report, Morgan Stanley noted, “In our view, LLTC is poised to outperform, reversing an extended period of underperformance. Linear's early positioning in the attractive end markets of autos and industrial is driving strong growth (sales CAGR 300 bp above the analog industry) at superior margins (75% GM vs. 50%-65% for peers). "A significant improvement in Linear's end market exposure—79% of sales from industrial, autos and comm), up from 66% five years ago—has been overshadowed by macro and semiconductor cyclical issues. We see optionality around cash returns, although management is non-committal to taking on debt at this point. Every 0.5x turn increase in net leverage ratio with proceeds to buy back stock adds $0.03 in EPS.” Linear Technology closed on Tuesday at $47.67.