Auriga Maintains a 'Buy' on Xilinx (XLNX); Strong Beat, Inline Guide despite Gross Margin Headwinds

Auriga maintains a 'Buy' on Xilinx (NASDAQ: XLNX), PT $39.

Auriga analyst says, "We maintain our Buy rating and $39 price target on Xilinx (XLNX) as the company reported strong 1QF12 results, which were comfortably ahead of our/consensus estimates despite a gross margin decline due to faster than expected ramp of newer 40nm/45nm products. The 2QF12 top-line guide came in ahead of consensus estimates, but our new EPS estimate is a penny shy of consensus estimate due to continued gross margin decline. We remain positive on the stock as the management expects a strong 2HF12 with improving gross margins. We also have greater conviction in our expectations of market share gains with the 28nm product family which should lead to stronger growth after CY12. Despite declining gross margins at both XLNX and Altera (ALTR, Buy) in the same quarter due to different reasons, our analysis suggests that longer term margin trends remain intact and we expect gross margins for both companies to bounce back in 4QCY11."

"Our FY12 estimate (pro-forma EPS, incl. SBC) goes to $2.49bln/$2.25 from $2.47bln/$2.25 (consensus at $2.46bln/$2.19. Our FY13 estimate goes to $2.69bln/$2.62 from $2.68bln/$2.69. Our FY13 EPS estimate moves lower due to higher R&D spending and lower gross margin expectations."

For more ratings news on Xilinx click here and for the rating history of Xilinx click here.

Shares of Xilinx closed at $33.69 yesterday.

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