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D.A. Davidson Cites Value, Cuts RF Micro Devices, TriQuint Semiconductor

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RF Micro Devices, Inc.'s (NASDAQ: RFMD) pending $1.6 billion acquisition of TriQuint Semiconductor (NASDAQ: TQNT) will leave the resulting company with little room for near-term share price growth, an analyst said Monday.

D.A. Davidson's Thomas Diffley downgraded the shares of both radio frequency device makers to Hold, from Buy.

Diffley sees only "modest upside" for the resulting shares in the upcoming 12 to 18 months, and noted that both companies have offered returns to investors of about 200 percent year-to-date.

Plans for the merger were unveiled in February.

With completion of the deal expected by months' end, Diffley said the resulting company, to be called Qorvo, will obtain $150 million in "synergies" and a gross margin of 50 percent.

"With a back of the envelope calculation, we get around $3 billion in revenue in 2016," Diffley said.

RF posted revenue of $1.15 billion for its fiscal year ended March 29, while TriQuint posted $892.9 million revenue for calendar 2013.

The resulting company will have 600 million shares outstanding following the all-stock transaction, but prior to a planned 4-for-1 reverse stock split.

Diffley put a $16 target on RF and a $27 target on TriQuint.

Latest Ratings for RFMD

DateFirmActionFromTo
Dec 2014NeedhamDowngradesBuyHold
Dec 2014DA DavidsonDowngradesBuyNeutral
Dec 2014BarclaysMaintainsEqual-Weight

View More Analyst Ratings for RFMD
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Posted-In: D.A. Davidson Thomas DiffleyAnalyst Color Downgrades Analyst Ratings

 

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