Needham analyst Rajvindra Gill maintained a Buy rating on MagnaChip (MX) today and set a price target of $10. The company’s shares closed yesterday at $7.
Gill noted:
“MX posted a solid quarter but guided revenue & margins well below the Street due to ongoing weakness in the Foundry segment (43% of sales). As a result of the inventory correction across its Chinese customers and its decision to be more selective in Foundry as part of its strategic evaluation, we expect a significant decline in utilization rates and GMs. We believe a sale or possible JV of the foundry segment/Fab4 makes sense as we think MX lacks scale to be successful in this market. Moreover, in a slowing macroeconomic climate, MX looks particularly vulnerable given its high-fixed cost structure. In addition, the possible proceeds from a sale could be used to pay down debt ($303M debt; $132M in cash). We envision several possible buyers of the and others.”
According to TipRanks.com, Gill is a 5-star analyst with an average return of 11.6% and a 56.5% success rate. Gill covers the Consumer Goods sector, focusing on stocks such as Everspin Technologies Inc, Smart Global Holdings Inc, and Adesto Technologies Corp.
The word on The Street in general, suggests a Moderate Buy analyst consensus rating for MagnaChip with a $10 average price target.
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Based on MagnaChip’s latest earnings release for the quarter ending September 30, the company reported a quarterly net profit of $17.22 million. In comparison, last year the company had a net profit of $43.65 million.
Based on the recent corporate insider activity of 24 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of MX in relation to earlier this year.
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MagnaChip Semiconductor Corp. engages in the design and manufacture of analog and mixed-signal semiconductor products. It operates through the Foundry Services Group and Standard Products Group segments.
