We Recommend Accumulation Of InvenSense Shares, Says Roth Capital; Reduces PT To $25

In a report sent to investors today, Roth Capital analyst Krishna Shankar assigned a Buy rating on InvenSense Inc (NYSE:INVN) but reduced his price target to $25 (from $28), following the company’s 2Q15 revenue results that were in-line but EPS was negatively impacted by older inventory write-down, pricing pressure at two large customers, and manufacturing inefficiencies.

Shankar wrote, “We believe that customer diversification, higher value-add SoC chips with software and algorithms, high-end platforms such as 7-axis and 9-axis platforms, together with new applications such as health and fitness, wearables, new gaming consoles, and smart TV remote controls will likely help gross margin improvements longer-term. We have 44% and 30% revenue growth modeled in our new FY15 and FY16 estimate driven by Apple design wins, growing market share gains with LG (Korea) and China Android customers such as Xiomi, Huawei, ZTE, CoolPad offsetting a leveling of growth at Samsung (already in 70% to 80% of Samsung phones).”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Krishna Shankar has a total average return of 9.8% and a 54.9% success rate. Shankar has a 4.0% average return when recommending INVN, and is ranked #518 out of 3350 analysts.

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