Canaccord Genuity Raises Price Target on Cirrus Logic, Inc. (CRUS) After Traveling with Management
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Canaccord Genuity reiterated a Buy rating on Cirrus Logic, Inc. (NASDAQ: CRUS), and raised the price target to $65.00 (from $56.00), after spending time with management. Some investors are concerned that the increased content in the recently-launched iPhone 7 could mark peak earnings growth for CRUS. However, Canaccord believes that its positive thesis is very much intact.
Analyst Matthew Ramsay commented, "We spent a very productive few days on the road in London and Edinburgh last week with Cirrus Logic CEO Jason Rhode, CFO Thurman Case, and VP of Cirrus' international businesses Allan Hughes. Interest from investors was strong considering the increased content in the recently-launched iPhone 7 that we believe increased by 70% versus the iPhone 6S, from ~$3.50 to ~$6.00 per phone - including headset and adapter content. While some investors have voiced concerns this significant content increase at Cirrus' largest customer could mark peak earnings growth for the company, we disagree and believe our positive thesis is very much intact given we believe Cirrus' leading portfolio of audio codec, amplifier and MEMS microphone products -- the complete audio value chain -- 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 and iPhone unit growth expectations. Key growth drivers include 1) further content gains with Cirrus' top customer, 2) high- and mid-tier Android share expansion, 3) digital/ANC headset leadership, 4) an emerging MEMS microphone franchise, and 5) long-term growth of audio sales into emerging IoT markets. We reiterate our BUY rating and raise our price target from $56 to $65 with materially increased F'17 and F'18 estimates."
Shares of Cirrus Logic closed at $55.32 yesterday.
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