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Credit Suisse Raises Price Target On Freescale Semiconductor On EPS Upside

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In a report published Wednesday, Credit Suisse analyst John W. Pitzer reiterated an Outperform rating on Freescale Semiconductor Ltd. (NYSE: FSL), and raised the price target from $30.00 to $35.00.

In the report, Credit Suisse noted, “Our Outperform rating on FSL is based on our view that the Company can drive levered EPS both cyclically and structurally. In total, we see LT earnings power of $3.50+. We see 3 key drivers to the Company's EPS growth: (1) leveraged growth: GM expansion to a medium-term target of ~50% from C4Q14 GM of 47.2% and LT GM / OpM target of low-to-mid 50s / 24-26% as FSL executes on the Company's redesign roadmap (manufacturing consolidation, operational efficiency, procurement, etc.) in which every 100bps of GM/OpM improvement drives ~$0.15 in EPS, (2) continued balance sheet deleveraging; FSL has ~$1.00 in EPS tied up in interest expenses, and the transition to an asset lite model, as well as an improved profitability should lead to better cash flow generation and (3) reaccelerating revenue growth through market share gains. 80+% of FSL revenue exposure is in I/A/I, 3 areas in which Semi content growth is under-appreciated by investors.”

Freescale Semiconductor closed on Tuesday at $26.35.

Latest Ratings for FSL

DateFirmActionFromTo
Oct 2015Deutsche BankMaintainsHold
Oct 2015BernsteinDowngradesOutperformMarket Perform
Mar 2015Drexel HamiltonDowngradesBuyHold

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