Needham & Company Boosts PT on Freescale Semi (FSL) to $16 Following 'Beat and Raise'

January 30, 2013 11:49 AM EST Send to a Friend
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Price: $21.01 +1.11%

Rating Summary:
    13 Buy, 6 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 18 | Down: 28 | New: 36
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Needham & Company raised its price target on Freescale Semiconductor (NYSE: FSL) from $12 to $16, while reiterating its Buy rating, following a solid beat and raise.

Analyst Rajvindra Gill comments, "We are increasing our price target to $16 (from $12) on FSL following a solid beat and raise both on the bottom and top line. Stock is up ~35% since we initiated (vs up ~5% for the S&P 500) on 9/26 (stock was $9.19), but we see continued upside driven by: clearer visibility into gross margin expansion, recovery in the end segments, and the ongoing deleveraging. In our view, the biggest risk to the story has always been a considerable slowdown in volume leading to lower gross margins, adversely affecting earnings due to the high leverage. However, with revenue topping estimates by 4% and gross margins on track to improve at least 50-75 bps per qrt, if not more, we believe FSL will outperform the indices if there is a recovery in the overall macroeconomy. FSL is seeing orders strengthen throughout the quarter and is tied nicely to automotive semi TAM and cyclical recovery in communication equipment. Reiterate Buy."

The firm raised 2013 estimates to $4.2B/$0.57 (vs. $4.12B/$0.45) and introduce 2014 estimates of $4.60B/$1.35.

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

Shares of Freescale Semiconductor closed at $12.39 yesterday.


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