Needham Sticks to Its Buy Rating for Silicon Motion (SIMO)


Needham analyst Rajvindra Gill maintained a Buy rating on Silicon Motion (SIMO) today and set a price target of $50. The company’s shares closed yesterday at $35.14, close to its 52-week low of $31.73.

Gill noted:

“We are lowering our 2019 ests based on our view that the China handset market will decline for a 2nd straight year. After falling significantly in 2018, we expect the overall China handset market to decline 10-15% Y/Y on a unit basis. SIMO addresses nearly a quarter of the smartphone market through its eMMC/ UFS solutions, and sells to the top 10 Chinese OEM,s thus its eMMC business is a good indicator of the dynamics of the smartphone market. We are forecasting eMMC (35-40% of sales) to decline 15% in ’19. We maintain the Buy as we believe the attach rates for client SSDs (~40% of sales) will continue to accelerate as NAND pricing declines rapidly throughout ’19. Moreover, we believe SIMO will utilize its $200MM stock buyback authorization to create a floor under the stock.”

According to TipRanks.com, Gill is a 5-star analyst with an average return of 10.9% and a 51.8% success rate. Gill covers the Consumer Goods sector, focusing on stocks such as Everspin Technologies Inc, Smart Global Holdings Inc, and Adesto Technologies Corp.

Silicon Motion has an analyst consensus of Strong Buy, with a price target consensus of $48.11, representing a 36.9% upside. In a report issued on January 9, Roth Capital also reiterated a Buy rating on the stock with a $45 price target.

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Based on Silicon Motion’s latest earnings release for the quarter ending September 30, the company reported a quarterly net profit of $29.23 million. In comparison, last year the company had a net profit of $9.87 million.

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Silicon Motion Technology Corp. engages in the development, manufacture, and supply of semiconductor products for the electronics market. It offers embedded and expandable storage, radio frequency integrated circuits, and embedded graphics. The company was founded in November 2005 and is headquartered in Hong Kong.

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