Analysts are weighing in on semiconductor firm Integrated Device Technology Inc (NASDAQ:IDTI) and biopharmaceutical company Axovant Sciences Ltd (NYSE:AXON), as shares of both companies fell sharply today.
Integrated Device Technology Inc
Integrated Device Technology shares are falling nearly 22% after the company reported fiscal third-quarter earnings, posting in-line EPS on slightly better revenue. However, revenue outlook of $182 million to $92 million was below the Street estimates of $196 million.
Reacted was Wedbush analyst Betsy Van Hees, which upgraded the stock from a Neutral to an Outperform rating, while raising the price target to $27 (from $26).
Van Hees commented, “We maintained our NEUTRAL rating heading into the print because we believed a lot was already priced in given our view that the Street had not adequately modeled in the recent acquisition of ZMDI and our concerns that 1) near-term growth in memory interface products was moderating, 2) the lumpiness in Communication, and 3) uncertainty on the trajectory of wireless charging. We were also worried that even with the recent pull back, a miss to the Street’s estimates for FQ4 could cause another pull back and we recommended that investors wait for a better entry point.”
“We are upgrading IDTI to an OUTPERFORM rating as we believe 1) the story is intact: IDTI is poised for Q/Q earnings and revenue growth in FY:17 driven by i) cost synergies and cross selling from the ZMDI acquisition, ii) return to growth in DDR4, particularly LRDIMM from ramp of Broadwell, and iii) ramp of wireless charging at Tier 1 OEMs, 2) that all of our near-term concerns are factored in to the Street’s reset to estimates, and 3) with the stock down -15+% in AHs trading that we are getting the entry point/pull back we were looking for and recommend investors buy the stock,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Betsy Van Hees has a yearly average return of 12.3% and a 49.0% success rate. Hees is ranked #210 out of 3632 analysts.
Axovant Sciences Ltd
Axovant Sciences shares are dropping nearly 25% following the news that Pfizer pulled the plug on an Alzheimer’s drug candidate because of disappointing efficacy. Axovant has a similar drug in late-stage trials, acquired from British pharma group GlaxoSmithKline, which had shelved the medicine after it performed poorly in clinical studies.
However, H.C. Wainwright analyst Andrew Fein remains positive on the name, reiterating a Buy rating and price target of $35, which implies an upside of 110% from current levels.
Fein noted, “We base our valuation purely on RVT-101 for Alzheimer’s disease in the US and EU and regard RVT-101 in DLB, nelotanserin (DLB, PDD) and further business development (blank check opportunity, see our initiation report dated January 8, 2016, “Risk Mitigated Core Assets and Blank Check Optionality; Initiating with Buy and $35 PT”) as additional optionality to company’s valuation. Our $35 PT is based on an equally weighted composite of: (a) $33.90/share, as a 35x multiple of taxed and diluted FY25 GAAP EPS of $5.47 discounted back to FY16 at 20%; and (b) an NPV of $35.40/share (discount rate 12%, growth rate 2.5%). Risks to our investment thesis and target price include: (1) failure of RVT-101 in clinical studies; (2) failure of RVT-101 to secure regulatory approval; and (3) failure of RVT-101 to achieve peak commercial revenue estimates in our model, due to market size, penetration rates, and pricing.”
According to TipRanks.com, analyst Andrew Fein has a yearly average return of -3.4% and a 41% success rate. Fein has a 2.5% average return when recommending AXON, and is ranked #2978 out of 3632 analysts.