NEW YORK (TheStreet) -- Tech parts makers InvenSense Inc (INVN) and Cirrus Logic (CRUS) - Get Cirrus Logic Inc. Report have tumbled in morning trading after reporting earnings the evening before. Semiconductor company Micron Technology (MU) - Get Micron Technology Inc. Report was immune to the big losses seen by its competitors.
Though second-quarter earnings beat expectations, a sluggish forecast for the third quarter disappointed the company's investors. Shares dropped 12.1% to $16.36 in morning trading.
InvenSense management said they expect earnings between 16 cents and 18 cents a share for the third quarter, on revenue in the range of $65 million to $68 million. Analysts surveyed by Thomson Reuters had anticipated 22 cents a share on $76.63 million in revenue.
For the second quarter, the San Jose, Calif.-based company reported earnings of 21 cents a share on 28.2% higher year-over-year revenue of $70.9 million.
Topeka Capital Markets restated its "buy" rating and raised its price target to $22 from $20, citing a "continued healthy position in the smartphone/tablet space boosted by seasonal gaming strength".The investment firm believes continued growth in demand for motion sensor and image stabilization technologies will benefit the business over the long term.
TheStreet Ratings team rates InvenSense INC as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate InvenSense INC (INVN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation."
- You can view the full analysis from the report here: INVN Ratings Report
Despite reporting positive earnings, fellow circuit maker Cirrus Logic dropped 12% to $21.50 in sympathy with InvenSense.
Cirrus reported second-quarter earnings of 84 cents a share on revenue of $190.7 million, well over expectations of 60 cents on $181.68 million from analysts surveyed by Thomson Reuters.
For the third quarter 2014, the Austin-based business anticipates revenue between $200 million and $220 million, with increased R&D and admin expenses in the range of $50 million to $54 million.
Gross margin, however, continues to fall both sequentially and year over year. For the third quarter, management expects it to fall to between 45% and 47%, compared to 52.2% in the second quarter 2014 and 51.03% in the third quarter of 2013.
Canaccord Genuity reiterated its "hold" rating on the stock, upping its price target to $24 from $18. The investment firm noted, "While we do not see any near-term catalysts to drive the shares higher, we believe a healthy cash balance and thus far secure position as a key supplier to Apple (AAPL) precludes a negative rating."
Oppenheimer likewise maintained a "perform" rating, remaining wary on less demand for the iPhone 5s/5c, which feature Cirrus-manufactured components. "Unit content, pricing and margin trends at Apple keep us sidelined," wrote the investment firm.
TheStreet Ratings team rates Cirrus Logic Inc as a Buy with a ratings score of B-. The team has this to say about its recommendation:
"We rate Cirrus Logic Inc (CRUS) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
- You can view the full analysis from the report here: CRUS Ratings Report
Micron Technology (MU)
Fellow semiconductor company Micron Technology managed to steer clear of the big share losses suffered by its competitors.
The NAND Flash and DRAM memory specialist dropped a comparatively conservative 0.86% to $17.34. TheStreet Ratings team upgraded its rating on the Boise, Idaho-based company to "buy" from "hold" on Monday.
The team has this to say about its recommendation:
"We rate Micron Technology Inc (MU) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 44.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 729.16% and other important driving factors, this stock has surged by 225.53% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Micron Technology Inc reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Micron Technology Inc turned its bottom line around by earning $1 a share vs. -$1.04 a share in the prior year. This year, the market expects an improvement in earnings ($2.13 vs. $1).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 802.9% when compared to the same quarter one year prior, rising from -$243 million to $1,708 million.
- You can view the full analysis from the report here: MU Ratings Report