Benchmark Upgrades CEVA Inc. (CEVA) to Buy; Using Weakness in Shares as Opportunity

Benchmark upgraded CEVA Inc. (NASDAQ: CEVA) from Hold to Buy with a price target of $31.00.

Benchmark analyst says, "We are increasing our investment rating on shares of CEVA, Inc. due mostly to a technical breakdown in shares, combined with an overall selloff in the chip group, shares have traded down to an attractive entry point, in our view."

"The iPhone5 (Nasdaq: AAPL) will most likely launch on October 4, and most investors know that the iPhone5 should include a Qualcomm (Nasdaq: QCOM) baseband. In fact, Qualcomm will likely become the main baseband supplier for most of Apple’s future iPhones and iPads. As Qualcomm’s non-CEVA-based basebands overtake the CEVA-based Intel basebands at Apple, CEVA will eventually miss this royalty source. Most investors are aware of this, and management’s 2H11 guidance reflects this royalty hole, which we estimate to be $2 million to $3 million per year. However, the royalty drop off will be gradual because Intel-based (Nasdaq: INTC) iPhone4 and iPhone3 smart phones will continue to be sold for some time. Some investors may be selling shares ahead of the iPhone5 launch for fear this factor is not 100% discounted in CEVA’s shares. We believe investors should capitalize on this opportunity and buy CEVA shares."

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

Shares of CEVA Inc. closed at $23.63 yesterday.

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