RF Micro ( RFMD )

Discussion in 'Stocks' started by aresky, Apr 9, 2009.

  1. aresky


    April 9, 2009 7:23 AM EDT

    UBS upgrades RF Micro (Nasdaq: RFMD) from Neutral to Buy.


    April 9, 2009

    RF Micro (NASDAQ:RFMD): Upgraded to Buy at UBS, ests upped significantly
    UBS is out with a major call on RF Micro (NASDAQ:RFMD) upgrading the stock to a Buy with a $3 tgt.

    The firm upgrades RFMD to Buy from Neutral for the following reasons: 1) They significantly raise estimates as recent checks show strengthening momentum 2) With major restructuring measures complete, RFMD is likely to see sizeable margin expansion due to increased utilization, and 3) They expect more positive action to reduce debt burden. Upgrade to Buy & raise PT to $3, equal to P/S of ~1.

    March marks the trough in fundamentals; Multiple drivers going forward
    Checks confirm that March was the tough, and strong momentum during the current restocking phase could support a high single digit (possibly low double digit) sequential growth in June qtr, compared to consensus view of +3% seq for June. Also, impact from recent restructuring should also contribute towards higher margins. UBS further believes that company’s new product initiatives aimed at reducing die size should also contribute towards higher revenue and margins.

    Raising estimates significantly
    Based on their positive view for the sector and improving outlook for RFMD, they are significantly raising our estimates. For FY10, they are modelling pro forma Rev/EPS of $798m/$0.08 (cons $743m/-$0.04), up from $721m/$0.02. For FY11, they are forecasting pro forma Rev/EPS of $886m/$0.16 (cons $812m/$0.00), up from $802m/$0.11.