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Silicon Motion (SIMO) PT Raised to $48 at Susquehanna; Buy on Pullback

April 28, 2016 3:49 PM EDT
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Price: $76.20 -0.13%

Rating Summary:
    15 Buy, 4 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 11
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Susquehanna analyst Mehdi Hosseini reiterated a Positive rating and bumped estimates and his price target on Silicon Motion Technology (NASDAQ: SIMO) to $48.00 (from $46.00) following the earnings conference call. They would use the pull back as an opportunity.

Hosseini commented, "When we updated our estimates on Apr-19 (LINK), we noted that for the stock to continue to work on the LONG side, and move to >$40, SIMO has to inspire confidence they can scale Shannon (Enterprise SSD), currently accounting for 6-7% of revenues. With the client SSD growth rate decelerating while eMMC flattening into 2017, it is the Shannon business that has to account for a much larger mix of total revenues (to help sustain revenue and EPS growth). In this context, on this am's call, SIMO discussed a higher growth rate for Shannon (as well as Client SSD), but we suspect some are concerned with a disappointing 2Q margin guide. In effect, some may think the margin headwind could bleed into 2H16, and thus eat into the higher revenues. We disagree, but the company has to execute and prove the bears wrong! One area we can point to, that illustrates SIMO's operating leverage is Revenue per employee which increased 10% Q/Q in 1Q, and rose 14% Y/Y. Although we expect this metric to be volatile on a quarterly basis, we expect it to increase in the longer term - which speaks to how much operating leverage remains to be realized. We are increasing estimates, and are raising our PT from $46 to $48."

For an analyst ratings summary and ratings history on Silicon Motion Technology click here. For more ratings news on Silicon Motion Technology click here.

Shares of Silicon Motion Technology closed at $41.30 yesterday.



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Analyst Comments, Analyst PT Change

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