) to buy from neutral.
Analyst Tom Thornhill says his upgrade is based on an improved revenue and margin outlook. He notes August-quarter results exceeded expectations thanks to higher margins, while November-quarter and fiscal 2004 margin guidance was higher than expectations.
Thornhill thinks even more margin leverage is possible if National Semi can improve its analog mix. He raised the 73 cents fiscal 2004 (May) earnings per share estimate to $1.07, and upped the $1.10 fiscal 2005 earnings per share estimate to $1.36.
Also, Thornhill increased the $26 target to $40; as National Semi has now demonstrated a new focus on bottom-line margins and return on capital, he thinks investors will reward it with a higher multiple than in the past.