NEW YORK (TheStreet) –– InvenSense (INVN) investors may have breathed a sigh of relief after the company's Gyroscopes and Accelerometer Combo chip was used in the latest Apple (AAPL) iPhones, but concerns over the company's outlook have caused a recent downturn in shares, which may provide a buying opportunity for investors.
InvenSense, headquartered in San Jose, Calif., is run by CEO Behrooz Abdi, who has helped get the company's chipsets into the iPhone. Investors have rewarded InvenSense, sending the stock up 13.7%, compared to a 20.1% loss for STMicorelectronics (STM) , one of its closest competitors.
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Last week's iFixit teardown of the iPhone 6 revealed the InvenSense MP67B 6-axis Gyroscope and Accelerometer Combo inside Apple's latest smartphone. Despite that, R.W. Baird analyst Tristan Guerra downgraded InvenSense shares on Monday. Guerra cut his rating to neutral from outperform, noting that large smartphone manufacturers could switch to a competitor or dual source the gyroscopes and accelerometers, which are used to help the iPhone flip and rotate the screen, flipping back and forth between portrait and landscape mode.
However, another teardown from Chipworks saw a Bosch accelerometer in the iPhone, which means Apple may be dual sourcing this feature.
Baird analysts noted that smartphone manufacturers could start sourcing more components from competitors, potentially privately held Bosch-Sensortec, or use chips from STMicroelectronics. A "global smartphone OEM may be switching to a dual-sourcing strategy for certain components, including gyroscopes," Guerra wrote in a note to clients on Monday.
Pacific Crest Securities analyst John Vinh noted that the recent selloff in shares since the teardown (a drop of 14% vs. a drop of 2% for the S&P 500) may be overdone, noting that the Bosch chip is only an accelerometer, and not a combo chip.