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Now Isn't the Time to Be Bearish on InvenSense (INVN) - Rosenblatt (AAPL)

September 22, 2014 12:13 PM EDT
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Price: $12.99 --0%

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    7 Buy, 12 Hold, 0 Sell

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    Up: 20 | Down: 14 | New: 22
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Rosenblatt Securities is defending InvenSense (Nasdaq: INVN) on Monday's sell off.

In part, analyst Brian Blair believes the market is undervaluing InvenSense's contract with Apple (Nasdaq: AAPL). While the market has a good idea of what iPhone 6/6+ shipments will be in the December quarter, there's less certainty for subsequent quarter. Most believe that Apple will sell 100 million units of the new iPhones, which are arguably the biggest item in consumer electronics today.

Investors could also be looking at valuation, which is currently around 20 to 25 times FY15 EPS expectations. While the valuation is rich, InvenSense has a key position in being the sole-supplier to Apple at this point, which is a very key position to be in. OEMs will double- or triple-source depending on market conditions, but Blair doesn't see that as the case here. There's a lot of forward value still not baked into the stock.

It's a surprising time to be bearish [on InvenSense], Blair said.

Shares of InvenSense are down 9 percent, just off of earlier lows.



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