Needham & Company Starts Vitesse Semiconductor (VTSS) at Buy

December 19, 2012 7:51 AM EST Send to a Friend
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Price: $3.46 --0%

Rating Summary:
    6 Buy, 1 Hold, 0 Sell

Rating Trend: Up Up

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Needham & Company initiates coverage on Vitesse Semiconductor (NASDAQ: VTSS) with a Buy. PT $3.50.

The firm cited:
  • Carrier and Enterprise networks are converging on Ethernet technology. Carriers and enterprises are increasingly turning to Carrier Ethernet as a scalable, low-cost solution to support a growing number of communications services on a single network.

  • Vitesse is at the forefront of Carrier and Enterprise network convergence. Over the past several years, Vitesse has focused significant resources developing Carrier Ethernet switch engines and physical layer solutions (PHYs) for the Mobile Access/IP Edge and SME markets. As such, Vitesse is poised to benefit from the convergence to a single Ethernet-based network.

  • Vitesse is a "New Product" story. Vitesse has introduced over 60 new products over the past two years and secured over 600 design wins over the past three years with an estimated lifetime revenue value in excess of $500MM. New Product revenue grew 111% in FY12 and management expects New Product revenue to double in FY13 and to double again in FY14.

  • Vitesse has significant operating leverage. Management has implemented numerous cost control measures to reduce quarterly expenses and believes the current level of OPEX can support a much higher revenue base.

  • Management is addressing the balance sheet and we do not expect the company will have to pursue additional dilutive equity-based financings to repay debt

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

    Shares of Vitesse Semiconductor closed at $2.01 yesterday.


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