Feltl And Company Reiterates Hold On Cypress Semiconductor Following 2Q14 Results

In a research report published today, Feltl and Company analyst Jeffrey Schreiner reiterated a Hold rating on Cypress Semiconductor (CY), but raised his price target to $10.50 (from $10), following second quarter earnings results.

Schreiner wrote, “We estimate weakness within PSD, relative to our prior forecasts, was due to PSoC and slowing smartphone growth near quarter end. PSD weakness, relative to our prior forecast, was somewhat offset by strength in industrial/auto/USB markets (FRAM/NVRAM, TrueTouch for auto infotainment, USB 3.0). Per CY industrial/auto segments equaled ~43% of revenues, while TrueTouch was closer to ~20%”.

Schreiner continued, “During CY14/15 we believe CY is poised to see some revenue growth return to its operating model, but improvements within non-GAAP EPS continue to be driven by improving GM/cost cutting. We estimate growth opportunities during CY14/15 could be driven primarily by the company’s PSD/MPD/ETD segments. Within PSD we anticipate prior headwinds within smartphones may turn towards tailwinds, but could face future challenges related to the introduction of TDDI (touch display driver integration), pricing, and competitive alternatives. We expect CY will likely see design momentum within the low/mid-end Chinese smartphone market, Huawei, ZTE and could captured continued opportunities in Samsung mid-low range smartphones during CY14/15 (CY has captured one high-end Samsung design win). In addition to estimated growth within PSD, we project CY’s emerging tech segment could contribute to growth during CY14/15”.

The analyst added, “While we forecast CY likely sees some revival in its smartphone touch IC revenues, higher industrial/automotive contribution, during CY14/15 we believe further catalysts will likely be needed to move our price target higher given the current forward P/E multiple implied in our valuation. We believe CY continues to face structural growth concerns within its TrueTouch/SRAM products and recommend investors remain on the sidelines until these potential issues are addressed”.

According to TipRanks.com, which measures analysts and bloggers success rate based on how their calls perform, analyst Jeffrey Schreiner has a 4.7% average return and a 61% success rate. Schreiner is ranked #706 out of 3215 analysts.

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