Canaccord Genuity Intiates Coverage on Cirrus Logic (CRUS) at 'Buy'; Analyst Sees Apple Content Growth and Android Share Gains

(Updated - June 21, 2016 10:43 AM EDT)

Canaccord Genuity initiated coverage on Cirrus Logic (NASDAQ: CRUS) with a Buy rating and a price target of $52. Analyst Matthew D. Ramsay sees Apple content growth and Android share gains. He also said the company's digital headset leadership will accelerate growth.

"We believe Cirrus' leading portfolio of audio codec, amplifier and MEMS microphone products is well positioned to yield strong sales and earnings growth for the company for the next several years, even despite the well-documented slowing of global smartphone growth and iPhone unit growth from leading customer Apple," said Ramsay.

Discussing Apple, the analyst said, "Cirrus continues to invest in its close partnership with Apple for audio products in iPhone and other devices. We believe Apple is set to eliminate the 3.5mm headphone jack starting in the iPhone 7. We believe this will both 1) add an additional external speaker for stereo sound (supported by an additional $0.50 amplifier from Cirrus) and 2) open opportunities for Cirrus to supply increased content into digital headsets connected through the Lightning port and into Bluetooth wireless earbuds sold by third-party vendors and potentially by Apple as an accessory. With the additional amplifier, we model iPhone 7 content for Cirrus growing from $3.50 to $4."

On Adroid share gains, Ramsay said, "Catalyzed by USB-C, we believe adoption of premium audio features (such as those in iPhone) will accelerate as Android OEMs look to differentiate. Cirrus penetration is low today at ~25% of premium tier Android smartphones and near zero within mid- and lower-tier designs. Even modest share gains could yield material upside to our estimates given the 1.1B+ unit Android TAM."

For an analyst ratings summary and ratings history on Cirrus Logic click here. For more ratings news on Cirrus Logic click here.

Shares of Cirrus Logic closed at $38.34 yesterday.

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