Needham & Company Upgrades Freescale Semiconductor (FSL) to Strong Buy on Earnings Leverage

Needham & Company upgraded Freescale Semiconductor (NYSE: FSL) from Buy to Strong Buy with a price target of $45.00 (from $35.00) following Q4 results which highlighted earnings leverage.

Analyst Rajvindra Gill commented, "FSL last night printed and guided in-line revenue, but GM% shined and the company introduced a long-term target model that we found impressive. We believe FSL has entered into a virtuous cycle by which it will continue to drive gross and operating margins higher via cost controls, resulting in accelerating FCF that can be utilized to continue its deleveraging campaign. Consequently, we see significant earnings leverage in the model even on modest revenue growth and view last night's results and guidance as important evidence of this plan. We are upgrading to Strong Buy and raising our Price Target to $45 as we see a multi-year path to leverage that could yield earnings power >$3 longer term."

The firm adjusted FY 2015 EPS from $1.77 to $2.15 and FY 2061 EPS from $2.30 to $2.60.

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 $26.35 yesterday.

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