DA Davidson Downgrades TriQuint Semiconductor (TQNT)

NEW YORK (TheStreet) -- DA Davidson downgrades TriQuint Semiconductor (TQNT) to "neutral" from "buy," a day after the company inked a merger with RF Micro Devices (RFMD).

The investment firm said the ratings revision was a valuation call based on a $12 price target. 

Shares of the semiconductor company spiked 26.1% on the merger news Monday. 

Also See: RF Micro Devices, TriQuint Ink $1.5B Merger

Must Read: 'Too Big to Fail' Gets Even Bigger

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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TheStreet Ratings team rates TRIQUINT SEMICONDUCTOR INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate TRIQUINT SEMICONDUCTOR INC (TQNT) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TQNT's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 14.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • TQNT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, TQNT has a quick ratio of 2.37, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 35.58% is the gross profit margin for TRIQUINT SEMICONDUCTOR INC which we consider to be strong. Regardless of TQNT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TQNT's net profit margin of -3.26% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 132.6% when compared to the same quarter one year ago, falling from -$3.76 million to -$8.74 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TRIQUINT SEMICONDUCTOR INC's return on equity significantly trails that of both the industry average and the S&P 500.

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