Needham & Company Maintains a 'Buy' on Magma Design (LAVA); Surprising 1Q Revenue Miss, But Full Year Outlook Remains Intact
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Price: $7.34 --0%
Rating Summary:
2 Buy, 1 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 21 | New: 20
Rating Summary:
2 Buy, 1 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 21 | New: 20
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Needham & Company maintains a 'Buy' on Magma Design (NASDAQ: LAVA) price target lowered from $8.00 to $7.50.
Needham analyst says, "In the wake of strong earnings reports from its EDA peers, in 1QF12, Magma had a surprising revenue miss, which it attributed to late quarter slippage of an up front deal with an OEM customer for the company’s yield management software. Management had previously stated that it expected this OEM arrangement would increase the company’s percentage of up-front (i.e., turns) business relative to its historical model and apparently we saw the occasional downside of a higher turns mix. Given the healthy EDA backdrop and the company’s reiteration of its prior full year guidance, we believe that the company’s full year outlook remains intact, but we also acknowledge the potential for higher quarterly revenue volatility relative to the company’s prior model. That said, with the stock looking to be ~9x our F13 EPS estimate afterhours despite the expectation of low-to-mid teens top line growth, we think this potentially riskier quarterly profile is already discounted in the stock."
For more ratings news on Magma Design click here and for the rating history of Magma Design click here.
Shares of Magma Design closed at $5.25 yesterday.
Needham analyst says, "In the wake of strong earnings reports from its EDA peers, in 1QF12, Magma had a surprising revenue miss, which it attributed to late quarter slippage of an up front deal with an OEM customer for the company’s yield management software. Management had previously stated that it expected this OEM arrangement would increase the company’s percentage of up-front (i.e., turns) business relative to its historical model and apparently we saw the occasional downside of a higher turns mix. Given the healthy EDA backdrop and the company’s reiteration of its prior full year guidance, we believe that the company’s full year outlook remains intact, but we also acknowledge the potential for higher quarterly revenue volatility relative to the company’s prior model. That said, with the stock looking to be ~9x our F13 EPS estimate afterhours despite the expectation of low-to-mid teens top line growth, we think this potentially riskier quarterly profile is already discounted in the stock."
For more ratings news on Magma Design click here and for the rating history of Magma Design click here.
Shares of Magma Design closed at $5.25 yesterday.
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