Why Peregine Semiconductor (PSMI) Stock Soared to a One-Year High Today

NEW YORK (TheStreet) -- Peregrine Semiconductor  (PSMI) soared to a new 52-week high of $12.43 on Friday after news that Japanese company Murata Manufacturing would buy the San Diego-based company for approximately $471 million.

Murata announced it would pay $12.50 a share, almost a 63% premium over Peregrine's closing price of $7.69 on Thursday. The companies, which both make radio-frequency modules, expect the deal to close by the end of 2014 or early 2015.

The stock was up 61.12% to $12.39 at 10:01 a.m. More than 3.4 million shares changed hands, compared to the average volume of 163,448.

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Separately, TheStreet Ratings team rates PEREGRINE SEMICONDUCTOR CORP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate PEREGRINE SEMICONDUCTOR CORP (PSMI) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."

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

  • PEREGRINE SEMICONDUCTOR CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, PEREGRINE SEMICONDUCTOR CORP swung to a loss, reporting -$0.14 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 264.3% in earnings (-$0.51 versus -$0.14).
  • 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 1231.3% when compared to the same quarter one year ago, falling from -$0.45 million to -$5.96 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, PEREGRINE SEMICONDUCTOR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 37.14%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1700.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • 42.19% is the gross profit margin for PEREGRINE SEMICONDUCTOR CORP which we consider to be strong. Regardless of PSMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PSMI's net profit margin of -12.67% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: PSMI Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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