Needham & Company Downgrades Magma Design (LAVA) to Underperform; Concerns Over Recent Spike in Up Front Revenue; Limited Upside to Takeout Price
Tweet
Share
E-mailGet Alerts LAVA Hot Sheet
Price: $7.34 --0%
Rating Summary:
2 Buy, 1 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
2 Buy, 1 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Join SI Premium – FREE
Needham & Company downgraded Magma Design (NASDAQ: LAVA) from Buy to Underperform.
Needham analyst says, "The shares are within 2% of the offer price from Synopsys with likely several more months until the close. More significantly, however, our analysis of LAVA’s recently filed 10-Q and earlier filings reveals that the company has seen a sharp spike in up front revenue in 2 of the last 3 quarters, which we think suggests the company’s sustainable revenue run rate could be materially below recent and projected levels if it were to adhere to its targeted 10% up front model. We note Magma will have to report at least one more quarter before the expected closure of its acquisition by SNPS. We would not be surprised to see another low quality, i.e., high up front % revenue quarter. While the weaker sustainable revenue outlook implied by our analysis may not be enough to cause SNPS to reconsider its bid, we think it does suggest that SNPS could be overpaying for LAVA—not underpaying as many investors first assumed—and also reduces the likelihood of higher competitive bid, in our opinion."
For an analyst ratings summary and ratings history on Magma Design click here. For more ratings news on Magma Design click here.
Shares of Magma Design closed at $7.18 yesterday.
Needham analyst says, "The shares are within 2% of the offer price from Synopsys with likely several more months until the close. More significantly, however, our analysis of LAVA’s recently filed 10-Q and earlier filings reveals that the company has seen a sharp spike in up front revenue in 2 of the last 3 quarters, which we think suggests the company’s sustainable revenue run rate could be materially below recent and projected levels if it were to adhere to its targeted 10% up front model. We note Magma will have to report at least one more quarter before the expected closure of its acquisition by SNPS. We would not be surprised to see another low quality, i.e., high up front % revenue quarter. While the weaker sustainable revenue outlook implied by our analysis may not be enough to cause SNPS to reconsider its bid, we think it does suggest that SNPS could be overpaying for LAVA—not underpaying as many investors first assumed—and also reduces the likelihood of higher competitive bid, in our opinion."
For an analyst ratings summary and ratings history on Magma Design click here. For more ratings news on Magma Design click here.
Shares of Magma Design closed at $7.18 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Coherent (COHR) PT Raised to $420 at Needham
- Celcuity Inc (CELC) PT Lowered to $140 at Needham
- Needham Reiterates Buy Rating on Lumentum (LITE)
Create E-mail Alert Related Categories
DowngradesRelated Entities
Needham & CompanySign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
