Needham & Company Maintains a 'Buy' on LTX-Credence (LTXC); Teradyne (TER) Purchases LitePoint for Big Premium; No Direct Impact on LTXC

Needham & Company maintains a 'Buy' on LTX-Credence (NASDAQ: LTXC) price target of $7.00.

Needham analyst says, "Teradyne (NYSE: TER) (Not/Rated) announced the purchase of LitePoint Corporation (N/R), a leader in wireless product test located in Sunnyvale, CA. Teradyne will pay $510M, net of tax and cash benefits, plus another potential $70M in performance targets for LitePoint's roughly $130M revenue stream in 2011 (implying a ~3.9x revenue multiple). Though LitePoint is well regarded in the wireless industry, it is not a provider of "big iron" ATE equipment; rather it offers test modules that are flexible and can be used in a production capacity but are just as likely to be found in a lab environment. We are skeptical investors will draw this distinction – that LitePoint competes with Rohde & Schwartz (N/R) & Agilent (NYSE: A) (Not/Rated) as opposed to LTXC - and LTXC may be defending its strong market share in RF PAs from investor sentiment phantoms. Teradyne will likely dovetail the RF test IP into production test at some point, however, but this integration will take many years."

For more ratings news on LTX-Credence click here and for the rating history of LTX-Credence click here.

Shares of LTX-Credence closed at $5.64 yesterday.

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