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UPDATE: Evercore Group Reiterates On Applied Micro Circuits On New Focus On X-Gene

Dwight Einhorn

In a report published Wednesday, Evercore Group analyst Michael Lucarelli reiterated an Overweight rating on Applied Micro Circuits (NASDAQ: AMCC), but lowered the price target from $15.00 to $13.00.

In the report, Evercore Group noted, “While we are disappointed with the poor results and exceptionally weak guidance, the reset clears a path for all focus to be on growth areas of X-Gene, X-Weave, and embedded ARM over the coming quarters. The large revenue shortfall stemmed completely from the legacy PowerPC business while connectivity performed well and X-Gene revenues started earlier than anticipated.

"Importantly, the base business, even at this low revenue level, remains capable of supporting X-Gene and X-Weave investments ahead of meaningful XGene deployments that are on track to ship before year-end (Mar). Purchase orders for X-Gene continue to grow and backlog is building with interest across all targeted verticals which now include HPC. With X-Gene 1 production silicon shipping today and X-Gene 2 on track for 1H15, our thesis remains unchanged that the time to own APM for XGene is over the next 12-18mo when it is the only custom silicon shipping in the market. Lower PT to $13 from $15 but maintain OW.”

Applied Micro Circuits closed on Tuesday at $9.67.

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