Microsemi (MSCC) Replaces NXP (NXPI) as Top Pick at Suntrust

October 26, 2016 3:17 PM EDT
Get Alerts MSCC Hot Sheet
Price: $54.45 +1.97%

Rating Summary:
    12 Buy, 3 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 17 | Down: 27 | New: 28
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SunTrust Robinson Humphrey maintained a Buy rating on Microsemi Corporation (NASDAQ: MSCC) with a price target of $51. The stock was also named as the bank's new Top Pick, replacing NXP Semiconductors (NASDAQ: NXPI). Analyst William Stein said he sees 58% upside if the company is acquired.

"Following the recent rise in NXP's stock price on the heels of a series of reports that the company is the target of a pending acquisition by Qualcomm, we transition our Top Pick to Buy-rated MSCC," said Stein.

"We envision three ways for investors to profit in MSCC: (1) if the company generates organic growth (even below its 6-8% target) it will deliver significant EPS growth, lower financial leverage, and should be rewarded with a higher P/E multiple; (2) if the company pursues another acquisition after achieving 3.0x leverage (we estimate in the December timeframe) it will not likely achieve P/E multiple expansion, but will benefit from higher EPS estimates; (3) if the company is acquired, which management has openly discussed, an average EV/Sales and EV/ EBITDA multiple imply a $60 stock price, or 58% upside potential. Meanwhile our stand-alone PT is $51," added the analyst.

For an analyst ratings summary and ratings history on Microsemi Corporation click here. For more ratings news on Microsemi Corporation click here.

Shares of Microsemi Corporation closed at $40.24 yesterday.

(Correction in headline)



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