How Cirrus Logic Can Win From A Strong Apple iPhone 6S
In a report published Friday, Piper Jaffray analyst Ruben Roy maintained an Overweight rating on Cirrus Logic, Inc. (NASDAQ: CRUS), with a price target of $44.
Cirrus Logic’s shares have received dipped 6 percent, versus a 4 percent decline in the SOX. The shares came under pressure after Samsung's negative preannouncement.
Analyst Ruben Roy believes that the sell-off was “overdone,” citing two factors:
- The company’s guidance “is typically conservative relative to industry expectations”
- Recent press reports suggest that Apple Inc.’s (NASDAQ: AAPL) iPhone 6S unit builds “could be higher than typical”
In the report Piper Jaffray noted, “We believe that CRUS is likely to see a meaningful increase in $ content/iPhone in the upcoming iPhone cycle from a new 55nm chip. Based on this increased content, our sensitivity analysis indicates that every 10m unit increase in iPhone 6S production could yield $0.07-$0.08 in incremental EPS for CRUS.”
Roy expects the new iPhone to use a “next-gen CRUS smart codec” that includes “its latest audio codec, DSP and software in a 55nm design.” This would be a highly integrated device that provides improved audio performance “while using a fraction of the board space.”
While the earlier version of the device were selling at around $1, Cirrus Logic has indicates that its next-gen smart codec devices plus embedded software “could yield ASPs in the $2.50-3.50 range.”
Roy added that Cirrus Logic is among “the best long-term technology plays into high volume smartphone OEMs” and recommended “buying the stock on weakness.”
Latest Ratings for CRUS
|Apr 2017||Pacific Crest||Upgrades||Sector Weight||Overweight|
|Dec 2016||Susquehanna||Initiates Coverage On||Positive|
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