EZchip (EZCH) is a Buy Despite Concerns - Benchmark

February 13, 2013 1:26 PM EST
Get Alerts EZCH Hot Sheet
Price: $24.88 +0.12%

Rating Summary:
    6 Buy, 8 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 35 | Down: 25 | New: 13
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Shares of EZchip Semiconductor (NASDAQ: EZCH) are getting pounded Wednesday following fourth quarter 2012 results and muted first quarter 2013 guidance. However, one analyst sees the sell-off as a opportunity.

Benchmark analyst Gary Mobley noted that following 1Q13 guidance, "investors are left to question the believability of management's long-term (FY16) revenue target of ~$150 million, which would translate into EPS of power >$2.50. Following the earnings call, investors are also left to question the extent of new customer penetration, specifically Tellabs and Huawei."

Despite the concerns, Mobley said EZchipā€™s NP-4/NP-5/NPS product cycle ramps will lead to strong, albeit inconsistent, revenue growth.

He published FY14 revenue/EPS (non-GAAP) estimates of $79 million/$1.34, which assume a 20% revenue CAGR for the next two years. He maintained a Buy rating and price target of $40.00.

For an analyst ratings summary and ratings history on EZchip Semiconductor click here. For more ratings news on EZchip Semiconductor click here.

Shares of EZchip Semiconductor closed at $32.24 yesterday.

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