Adaptive and intelligent computing company Xilinx, Inc. (NASDAQ: XLNX) reported fiscal first-quarter results that were mostly in-line with expectations but management guided towards a weaker September quarter.
Management said it expects fiscal second-quarter revenue to come in at $825 million, short of the Street's model of $857 million. The company also shied away from its full year 15% revenue growth due to export restrictions to China's Huawei.
Nevertheless, three analysts felt the case for turning incrementally bullish on Xilinix's stock can be made.
Huawei In Perspective
Xilinx stopped shipping its products to Huawei in the middle of the prior quarter when the Chinese company was blacklisted from doing certain business with American companies, Morgan Stanley's Joseph Moore said. Xilinx will resume some shipments to Huawei, but it won't be 5G related and management's outlook implies minimal revenue from Huawei is expected.
"We believe that the company's approach to the entity list situation is quite conservative,and is consistent with our expectations," the analyst wrote in a note.
While Xilinix's performance was negatively impacted by Huawei, the company is showing overall growth in 5G as other customers are ramping their spend, Mizuho's Vijay Rakesh said. Encouragingly, the longer deployment stage for 5G will consist of 50% more base stations compared to 4G along with twice the silicon content and 30% higher market share.
"This creates a scenario where 5G can achieve a 16% compounded annual growth rate through 2024 and collect three to four times more revenue compared to 4G," the analyst wrote.
Strength In Other Segments
By segment, the loss of business with Huawei resulted in a revenue miss across the Wired and Wireless Group (WWG) and Data Center Group (DCG) units, KeyBanc Capital Markets' John Vinh said. On the other hand, Aero & Def, Industrial (AIT) revenue of $334 million rose 10% from last year and exceeded estimates of $302 million.
"We continue to view XLNX as one of the best secular stories in semis for its favorable positioning in 5G and accelerated cloud computing," Vinh wrote.
Ratings And Price Targets
- Morgan Stanley maintains an Overweight rating on Xilinix with a price target lifted from $126 to $134.
- Mizuho maintains at Buy, price target lifted from $135 to $140.
- KeyBanc maintains at Overweight, price target lifted from $130 to $140.
Shares of Xilinx were trading lower by more than 2.5% at $128.79 Thursday afternoon.
Latest Ratings for XLNX
View More Analyst Ratings for XLNX
View the Latest Analyst Ratings
See more from Benzinga
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.