While Silicon Motion Technology Corp. (NASDAQ: SIMO) has favorable near-term customer tailwinds and may generated meaningful earnings growth over the intermediate term, the estimates for the back half of 2019 already reflect its favorable momentum, according to Wedbush.
Wedbush’s Matt Bryson initiated coverage of Silicon Motion Technology with a Neutral rating and a price target of $39.
Although near-term momentum appears favorable for Silicon Motion Technology, there are potential macro concerns and future customer risk that could impact performance in 2021, Bryson said in the note.
Heading into the fourth quarter, fundamentals appear more favorable than earlier and many of the risks the company had been facing seem to be in the rearview mirror, the analyst mentioned.
He added that there is “some probability for special situations upside,” considering the demand for application-specific integrated circuit design teams and a lack of merger and acquisition targets due to the substantial consolidation that has already taken place in the semiconductor space.
Bryson said, however, that a more constructive stance on the stock is prevented by Silicon Motion Technology’s aggressive guidance for the second half of 2019 and concerns around the impact of macro conditions beyond 2020.
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|Oct 2019||Initiates Coverage On||Neutral|
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