Roth Capital Says Exar's New Management Team Is 'Executing Efficiently,' Initiates At Buy

In a report published Friday, Roth Capital Partners analyst Krishna Shankar initiated coverage of

with a Buy rating and $14 price target. Krishna noted that the company has a "diversified" customer base (over 25,000 customers) that are served through OEM and distribution channel partners. The analyst added that under the leadership of the company's CEO Lou DiNardo, Exar has restructured and improved its operating efficiency while accelerating new analog/mixed signal, power management, signal conditioning/amplifers, video compression, and data compression/security platforms. "We view Exar as a diversified analog and mixed-signal semiconductor company focused on high-growth segments in the industrial/ embedded, high-end consumer, and networking/infrastructure markets," Shankar wrote. "In our opinion, the new management team is executing efficiently with a synergistic mix of organic growth and targeted acquisitions which may be positive catalysts for the stock." Krishna also wrote that management's recent guidance of 2 percent to 5 percent sequential revenue growth for the fourth quarter with gross margins likely continuing to improve are driven by mix and operating efficiency. The analyst's $14 price target is based on a 15x proforma CY16 EPS estimate of $0.94 relative to estimated 20 percent secular earnings growth.