Rajvindra Gill, Needham & Co.: Reiterates a Buy rating, and raises his price target to $55 from $50. “CRUS reported a significant beat and raise quarter owing to stabilizing Apple iPhone 7 units combined with a ~40% dollar content increase. As we move into the C2H16, we are somewhat cautious with our assumptions as we believe CRUS has limited visibility and there exists potential sell-through risks at Apple. For FY18, we see a number of growth vectors including expansion into the mid- tier smartphones, higher sales of ANC chipsets that carry higher ASPs and additional amplifier sales. At Apple, we believe CRUS is also well-positioned next year for the iPhone 8, which we believe will be the “super” upgrade cycle (units should grow Y/Y), together with another 30% in dollar content per unit ($5 to $7) [...] As expected, revenue from Samsung declined due to share loss at Qualcomm, as Samsung transitioned to using Qualcomm’s baseband for the majority of its phones, which integrated the audio codec … This was the primary cause of the 8% year-over-year decrease in Portable Audio revenue of $216.1 million compared to $235.9 million in the year prior.” Gill raised his 2017 estimates to $1.409 billion in revenue and $3.10 EPS from a prior $1.345 billion and $2.85.
Matthew Ramsay, Cannacord Genuity: Reiterates a Buy rating, and raises his price target to $56 from $52. “Financials demonstrate our thesis of content gains with Cirrus largest customer and share expansion within the Android ecosystem are both taking place. Overall, our positive thesis is very much intact and gained valuable proof points in the JuneQ results. We maintain our belief Cirrus’ leading portfolio of audio codec, amplifier and MEMS microphone products — the complete audio value chain — is well positioned to yield strong sales and earnings growth for the company for the next several years, even despite the well-documented slowing of global smartphone and iPhone unit growth expectations. Key growth drivers include 1) content gains with top customers, 2) Android share expansion,3) digital/ANC headset leadership, 4) an emerging MEMS microphone franchise, and 5) long-term growth of audio sales into emerging IoT markets. We reiterate our BUY rating and raise both our estimates materially and our price target from $52 to $56.” For 2017, Ramsay raised his estimates to $1.416 billion and $3.29 per share from a prior $1.33 billion and $2.84 per share.
Tom Sepenzis, Northland Capital Markets: Reiterates an Outperform rating, and raises his price target to $55 from $45. “Handsets – Audio products for handsets were the primary driver in the June quarter beat as its top customer did slightly better than expected in unit sales and is beginning to ramp its new product introductions for the Fall. We expect CRUS will see additional boosted amplifier content in the upcoming products and this is helping push revenue up Y/Y despite relatively flat unit growth for the same time period. This should continue to drive better Y/ Y comps for the next year, especially as CRUS moves to 55 nanometer geometries.” Sepenzis raises his fiscal 2017 estimates to $1.4 billion and $3.21 per share from $1.3 billion and $2.88 per share.
John Vinh, Pacific Crest: Reiterates a Sector Weight rating. “Cirrus posted significant upside driven by incremental content. Guidance implies $2.50 in incremental content (a 70% increase) versus the expectations of $1.50, resulting from the anticipated transition to digital headsets. With much of these expectations now reflected in Street expectations, and the stock’s recent outperformance, we see limited upside.” Vinh raises his 2017 estimates to $1.4 billion in revenue and $3.31 per share from a prior $1.27 billion and $2.85 per share.