Morgan Stanley Sees Lower 2015 Expenses For Altera

In a report published Thursday, Morgan Stanley analyst Joseph Moore reiterated an Overweight rating and $36.00 price target on

. In the report, Morgan Stanley noted, “Altera announced updated guidance for 2015. The company updated their gross margins to be between 67-69%, up more than 100 bps yoy and in line with our 67.9%. The company guided operating expenses to be up 2.7% yoy, with R&D expenses of $441m (vs. our $460) and SG&A at $319m (vs. our $323).They guided to higher tax rates of 13-14%,vs. our 11%. Sharecount is about 300 mm,vs. our est 303 mm. This nets out to our estimates coming up slightly, with our 2015 GAAP EPS moving up 2c to $1.78. The company stated that the growth in 2015 would be more balanced, with sub-verticals with stronger margin profiles showing strength. Altera expects to return 60-80% of cash flows from operations through dividends and buybacks. They do expect to grow in 2015,and show operating leverage by revenue growth in excess of opex growth rate of 2.7%.” Altera closed on Wednesday at $37.14.