Shares of Integrated Device Technology Inc (NASDAQ:IDTI) are down 10% to $19.97, after the analog chip maker reported disappointing revenue and EPS guidance, as it will be impacted by the loss of a socket at top customer, Huawei, who has internally designed out IDTI’s SRIO solution.
In reaction, Brean Capital analyst Mike Burton reduced his price target to $23.00 (from $26.00), while reiterating a Buy rating for the stock.
Burton wrote, “This socket loss will result in a roughly $12M quarterly deduction to revenue going forward. While this development is disappointing, longer term we still have conviction in the IDTI story as we believe the company can reach its operating margin target of 30% by mid-year CY17 (note: IDTI projects it will hit 30% OM by Mar-17Q) despite the reduced revenue forecast.”
“We believe the company has some exciting opportunities in the wireless charging market as well as new areas of growth in Automotive (ZMDI) and in environmental sensing. While we acknowledge there was a misstep in the current quarter, we see IDTI’s execution in the timing / clocking market segment as one example and a proxy for success moving forward, as we believe the company will continue to build upon its current product base, enter new markets, and continue to refine its business model to that of its “high performance” analog peers”,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mike Burton has a yearly average return of 14.9% and a 69% success rate. Burton has a 0.3% average return when recommending IDTI, and is ranked #71 out of 4083 analysts.
Out of the 9 analysts polled by TipRanks, 8 rate Integrated Device Technology stock a Buy, while 1 rates the stock a Sell. With a return potential of 29%, the stock’s consensus target price stands at $25.78.