Market Overview

MKM: Cypress Semiconductor Has Repositioned Itself For Market-Leading Growth

Share:
MKM: Cypress Semiconductor Has Repositioned Itself For Market-Leading Growth

Cypress Semiconductor Corporation (NASDAQ: CY) provided an update on its Cypress 3.0 strategy at a Wednesday analyst day event. With a focus on the IoT and automotive markets, the company has raised its longer-term gross margin and operating margin targets, according to MKM Partners.

The Analyst

MKM Partners’ Ruben Roy maintained a Buy rating on Cypress Semiconductor and raised the price target from $16 to $18.

The Thesis

Cypress Semiconductor has repositioned its business to focus on the IoT and automotive markets, which it believes can grow at a CAGR of 12-14 percent and 8-12 percent, respectively, through 2023, Roy said in a Thursday note. 

In the fourth quarter, these key markets combined accounted for 68 percent the company’s overall revenue, while legacy products represented only around 33 percent, the analyst said. 

Cypress Semiconductor raised its gross margin target from 50 percent to more than 50 percent, Roy said. The company said that if legacy products were removed from the model, gross margins would already be at the 50-percent mark, he said.

The longer-term operating margin target has been raised from 20 percent to greater than 25 percent. This improvement is mainly on account of structural changes in the company's memory business, the analyst said. 

Cypress Semiconductor provided a longer-term free cash flow margin target for the first time, projecting it at more than 20 percent of revenue, with $3 billion in FCF expected over the next five years, Roy said. 

Cypress Semiconductor is participating in robust design activity across these markets and has differentiation that should support its growth expectations, according to MKM Partners. 

Price Action

Cypress Semiconductor shares were down 0.26 percent at $15.12 at the time of publication Thursday. 

Related Links:

Semiconductor Winners, Losers In A Potential Sino-American Trade Deal

60 Biggest Movers From Friday

Photo courtesy of Cypress Semiconductor. 

Latest Ratings for CY

DateFirmActionFromTo
Mar 2020CFRAUpgradesHoldBuy
Mar 2020Craig-HallumUpgradesHoldBuy
Nov 2019Cowen & Co.DowngradesOutperformMarket Perform

View More Analyst Ratings for CY
View the Latest Analyst Ratings

 

Related Articles (CY)

View Comments and Join the Discussion!

Posted-In: MKM Partners Ruben Roy semiconductorsAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
RIGRF LaffertyMaintains5.0
NOVRF LaffertyMaintains13.0
WSCDA DavidsonMaintains19.0
ITTDA DavidsonReiterates70.0
NOWGoldman SachsMaintains376.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com