Susquehanna Raises Price target on Fairchild Semiconductor (FCS) Following 3Q Earnings
Susquehanna remains Positive on Fairchild Semi (NASDAQ: FCS), and raised the price target to $20.00 (from $18.00), following the company's 3Q earnings report. FCS reported revenue of $342 mln, down 4% Q/Q, slightly ahead of the pre-announced range of $340 mln. Opex of $88 mln was down 12% Q/Q, and came in better the preannounced range of $90 mln-$92 mln.
Analyst ChrisCaso commented, "FCS’s report and guidance reflect what we consider to be a classic semiconductor inventory correction, where the weakness in China has caused distributors and customers to reduce inventory, and caused FCS to reduce production (negatively affecting GMs), resulting in FCS shipping below consumption. Consistent with our view when we upgraded the stock last month, we think this situation, coupled with the effect of cost reductions, sets up FCS for positive revisions in 2016. Of course, given the current M&A speculation, none of this matters at the moment. We expect the near-term performance of the stock to be mainly dependent on whether FCS indeed attracts a buyer. Given the company’s potential to generate strong free cash flow, we wouldn't be surprised for there to at least be some interest from competitors, though it's impossible to know whether such interest would materialize into an offer."
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Shares of Fairchild Semi closed at $16.35 yesterday.