Needham & Company Downgrades Intersil (ISIL) to Hold; It's A Waiting Game Now

February 2, 2012 7:36 AM EST
Get Alerts ISIL Hot Sheet
Price: $22.31 --0%

Rating Summary:
    7 Buy, 12 Hold, 4 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 22 | New: 54
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Needham & Company downgraded Intersil (NASDAQ: ISIL) from Buy to Hold.

Analyst, Vernon Essi, said, "ISIL reported Q4 revenue and EPS that was more or less in line and provided Q1 guidance that was materially below consensus. We believe this was anticipated and the share price will discount any negative sentiment near-term. However the greater question for ISIL looms: how high is its next revenue peak and how long will it take to get there? Given that that Q1 revenue is forecast to be down 22% Y/Y at the midpoint of the guidance range, it will be hard to contemplate a flat 2012, let alone a year of growth. We are forecasting a revenue decline of 9% in 2012 followed by growth of 8% in 2013. We reduced our 2012 revenue/EPS estimates from $801M/$0.90 to $695M/$0.45 and introduced our 2013 revenue/EPS at $753M/$0.60. Near-term the turns requirement for Q1 is flat at 35% and given management's clear inclination to keep inventory very low, ISIL's revenue is poised to bounce sharply when demand returns. We expect the shares to have a muted to favorable response to this otherwise lackluster print and guide and would suggest investors take advantage of this share strength to downsize positions. Hence, given our lowered estimates we can no longer justify a Buy rating."

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

Shares of Intersil closed at $11.67 yesterday.

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