Needham & Company maintained a Buy rating on Silicom Ltd. (NASDAQ: SILC), and cut the price target to $40.00 (from $45.00), following the company's 4Q earnings report. Silicom reported strong results for the year. However, dilution from an acquisition closed in 1Q and aggressive reinvestment in R&D and Sales is increasing OPEX. As a result, Needham increased Revenue estimates but trimmed EPS forecasts. Management also offered solid revenue guidance, and noted that there is considerable momentum in the business, and potentially a considerable upside to the quarter.

Analyst Alex Henderson commented, "Silicom crushed the CY4Q15 forecast. They offered a respectable Revenue guide for CY1Q16. However, dilution from an acquisition closed in 1Q and aggressive reinvestment in R&D and Sales is increasing OPEX. As a result, we are increasing our Revenue estimate but trimming our EPS forecast. We are also lowering our Price Target to $40 from $45. That said, we were impressed by the strong tone of business and management's solid confidence in the outlook. As the noise in CY4Q makes it hard to read trends, the 1Q guide is conservative but there is potential for considerable upside. Silicom think they have a number of major project poised to contribute to growth which should drive upside."

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Shares of Silicom Ltd. closed at $30.81 yesterday.