Needham & Company Downgrades Cypress Semi (CY) to Hold; Near-Term Risks and Valuation Concerns
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Price: $23.82 --0%
Rating Summary:
10 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
Rating Summary:
10 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
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Needham & Company downgraded Cypress Semi (NASDAQ: CY) from Buy to Hold.
Needham analyst says, "CY’s current share price is only 5% below our $20 price target, and therefore, at current price levels, we believe the risk/reward profile is balanced with limited upside. We see risks to forward estimates due to: 1) non-Apple tablet inventory correction extending into 1Q12; 2) continued SRAM weakness due to softness in wireline/wireless infrastructure spending; 3) accelerating ASP erosion in touch controllers due to transition to single-chip from multichip in tablets and competitive pricing in handsets; and 4) gross margin pressure. Moreover, CY is trading at a premium to other touch controller competitors (Synaptics (Nasdaq: SYNA) & Atmel (Nasdaq: ATML)) at 14.6x (ex-cash) on our revised 2012 EPS, compared to 12.8x (ex-cash) for Cypress and 12.3x for SYNA (ex-cash). While we believe there are several growth drivers for CY longer term, namely the USB 3.0 ramp, roll-out of PSoC 3/5 product and DECA emerging technologies, we need to see a reset of earnings in order to become more constructive on the stock."
For an analyst ratings summary and ratings history on Cypress Semi click here. For more ratings news on Cypress Semi click here.
Shares of Cypress Semi closed at $19.00 yesterday.
Needham analyst says, "CY’s current share price is only 5% below our $20 price target, and therefore, at current price levels, we believe the risk/reward profile is balanced with limited upside. We see risks to forward estimates due to: 1) non-Apple tablet inventory correction extending into 1Q12; 2) continued SRAM weakness due to softness in wireline/wireless infrastructure spending; 3) accelerating ASP erosion in touch controllers due to transition to single-chip from multichip in tablets and competitive pricing in handsets; and 4) gross margin pressure. Moreover, CY is trading at a premium to other touch controller competitors (Synaptics (Nasdaq: SYNA) & Atmel (Nasdaq: ATML)) at 14.6x (ex-cash) on our revised 2012 EPS, compared to 12.8x (ex-cash) for Cypress and 12.3x for SYNA (ex-cash). While we believe there are several growth drivers for CY longer term, namely the USB 3.0 ramp, roll-out of PSoC 3/5 product and DECA emerging technologies, we need to see a reset of earnings in order to become more constructive on the stock."
For an analyst ratings summary and ratings history on Cypress Semi click here. For more ratings news on Cypress Semi click here.
Shares of Cypress Semi closed at $19.00 yesterday.
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