Estimate & Target Price Details. We update our FY14 revenue/proforma
EPS estimates from $69.2 million/$0.14 to $65.6 million/$0.02 and our FY15
estimates from $89.3 million/$0.44 to $88.3 million/$0.44. While early to
quantify, upside exists to our FY15 estimates depending on success with
Apple and other Android and PC in video processor chip and licensing/
royalties revenues for future iPAD, iPhone, and Apple TV applications, premium
notebook applications, and other Android smartphone/tablet customers. We
raise our target price from $10 to $12 is based on 30x CY15 proforma EPS
estimate of $0.44 and discounting back 10%, using a PEG ratio of 1x relative
to 30% secular earnings growth.
Update on PXLW-Apple relationship. We believe that industry speculation around the launch of 5-inch and 6-inch iPhones, together with new potential Apple TV launch and a larger 12-inch iPAD, are positive data points for the possible incorporation of PXLW mobile display processing IP and chips within Apple products. We note that a small fraction of Apple's iPhones (200 million units a year) and iPADs (100 million units a year) incorporating PXLW IP or chips could contribute significant upside to our FY15 estimates. As an example, if PXLW IP or chips are incorporated into 50 million Apple mobile devices in 2015 with an operating profit of $0.50 per unit to PXLW, it could yield incremental upside to FY15 EPS of $0.75 to $1.00, which is not included in our current estimates. We note that PXLW management cannot disclose any details of the Apple relationship such as licensing, royalty, design win platforms etc. Similar to the previous 8K filing detailing Apple as a 10% revenue customer, we will likely have to wait for financial milestones. We note that any teardown of future Apple platforms is unlikely to easily reveal PXLW IP if it is buried inside the System-on-Chip.
PXLW: Update on 2Q14 Results; Positive
Long-Term Outlook; Buy
Estimates Changed, Target Price Changed
PXLW had solid 2Q14 results and guidance driven by ramp of new projector
platform and demand for high-resolution/4K Ultra-high definition TV/monitor
video processors. We are positive on continued IP licensing/royalty revenues
and Iris mobile video processor revenues (chip sampling now) from the
high-volume smartphone, tablet and premium notebook PC market. PXLW
estimates may have upside if the mobile video processor chips or IP are
adopted in some high-end smartphone/tablets.
Update on 2Q14 Results PXLW reported solid 2Q14 results with revenues/
pro-forma EPS of $15.2 million/$(0.06) versus our $15.0 million/$(0.03)
estimates and guided to strong 12% sequential revenue growth. The revenue
mix was 73% projectors, 23% TV/monitors, 1% IP licensing revenues. We
believe that the new projector chip platform has commenced production and
the company is observing good demand for its next-generation 4K Ultra-high
definition TV video processor chips. Management indicated a healthy pipeline
of mobile video processor chip and IP deals and the Iris mobile platform will
likely ramp during 2015. Upside potential exists for our FY15 estimates if
PXLW mobile video processor chip or IP technology is adopted by high-end
smartphone, tablet, and notebook customers such as Apple, Samsung, HP,
Dell, HTC, LG, Lenovo, Acer, Asustek, Sony and emerging China players such
as Xiomi, Huawei, ZTE etc. We estimate that the projector market opportunity
represents 8 to 10 million units per year growing at 5 to 10% per year; highend
Ultra high definition TVs and monitor/displays represent 10 to 20 million
units; while the combined high-end smartphone/tablet and notebook market
represents a significant TAM of 300 to 500 million units per year growing at
20 to 25% per year.
XNPT: A Top Small-Cap Idea With '829's Overlooked Promise
• Summary: XNPT shares have remained under pressure and are down
substantially (along with much of the sector) from their highs earlier this year,
despite multiple positive developments, in our view – promising full phase I
PK/PD data for ‘829, regulatory clarity on a potential path forward for the drug in
MS, progression of the drug into phase II, and script growth for Horizant. We
believe XNPT has been off of investors’ radars with the next major datapoint, the
phase II psoriasis data, still about a year away; we believe this creates a highly
attractive entry point, with the company’s ~$160MM enterprise value
dramatically overlooking ‘829’s reward/risk profile and opportunity in MS and
shares likely to appreciate as the phase II data approach nearer. XNPT remains a
top small cap idea.
Valuation Range: $10.00 to $11.00
In our view, XNPT is undervalued based on '829's promise in MS and psoriasis.
In sum, Sensor Platforms represented the springboard allowing QuickLogic’s CSSPs to be used as sensor hubs; however, more recent initiatives have positioned QuickLogic to be more agnostic to algorithms, sensors and processors.
While it is uncertain whether Audience, Inc. will continue to “license out” Sensor Platforms’ algorithms, this development should NOT derail QuickLogic’s ArcticLink III S1 sensor hub product roadmap, and this development should NOT negatively impact sales prospects for ArcticLink III S1 sales during 2H FY14.
We believe that ADNC's acquisition of privately-held Sensor Platforms, Inc will not disrupt QUIK's momentum in the smartphone/always-on wearables sensor hub market.
QUIK's current and future sensor hub platforms are intentionally designed to be algorithm, sensor and processor agnostic. QUIK has demonstrated good platform performance on several key applications processor and sensor platforms using QUIK's in-house developed algorithms/software working in conjunction with OEM and third-party ISVs including private software/algorithm companies such as SPI, Hillcrest Labs, Movea,
Maintain our Buy rating
Sidoti cuts estimates:
Although We Remain Bullish On MXWL’s Growth Prospects In The China Bus Market, Sluggish
Bus Volumes Prompt Us To Trim Our 2014 Forecast; Maintain BUY Rating, $21 Price Target
• In our view, sluggish bus production data through May from key ultracap customer Yutong (foreign) warrants a reduced outlook for 2014.
Our updated 2Q:14 sales forecast of $42.9 million compares with the FactSet consensus of $47.2 million. We recommend investors keep a close eye on Yutong’s June production numbers (likely to be released in early July) as validation of our 2Q:14 earnings revision.
Roth reiterates Buy today:
We believe that the introduction of the Amazon Fire Phone with multiple sensors such as gyros,
accelerometers, compass, pressure sensor, dynamic perspective sensor, proximity sensor, ambient light sensor, advanced audio and microphone sensors highlight the need for low-power, always-on sensor hubs which can intelligently process the sensor signals and present the optimum signal to the power-hungry apps processor which will only be woken up on demand for context-sensitive applications. QUIK also recently introduced its ultra-low power, always-on S1 Wearable Sensor Hub platform for wearable computing and display applications targeting a 40 to 50 million unit market in 2014 rising to 90 to 100 million units in 2015, according to NPD Display Research. We believe that the catalog CSSP Wearable sensor hub platform, available for immediate production ramp, provides an out-of-box complete solution with software and algorithms to enable fast time-to-market for health, fitness, and wearable computing/display applications. QUIK has developed algorithms such as "tap-to-wake" and "Rotate-Wrist-To-Wake" as part of the Catalog CSSP platform for quick time-to-market which allow the wearable device to respond to user movements and gestures without waking up the power-hungry applications processor. We reiterate our Buy rating and believe that QUIK has growing design win momentum for its programmable connectivity and sensor hub chips targeted at the 1 billion plus smartphone and always-on wearable computing/display market with potential significant revenue ramp during 2015.