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Needham upgraded Microsemi (MSCC
) to strong buy from buy.
Analyst Ted Kundtz says the upgrade is based on weakness in shares, which he believes is due to momentum players (who drove the stock up and now are exiting). He says Q3 results were in line with the company's guidance, and adds that management said Q4 revenue would be about $57 million to $61 million. While these results would be sequentially flat, Kundtz says it's certainly not nearly as bad as peers' sequential guidance.
Kundtz thinks the positive story here is Microsemi's ability to deliver on gross margins. He raised the $1.23 fiscal 2001 (Sept.) EPS estimate to $1.27, and raised the $1.60 fiscal 2002 estimate to to $1.65. He also raised the $2.14 fiscal 2003 estimate to $2.20. He has a $75 target, and thinks the weakness is creating a great time to get in.