NEW YORK (TheStreet) -- Shares of Cirrus Logic (CRUS) are up 6.32% to $20.08 in pre-market trading after Barclays upgraded the Austin-based circuit company to "overweight" from "underweight" and raised its price target to $28 from $18.
"We believe CRUS' content at Apple (AAPL) is again increasing (to $2.50-3.50 from $2 today) and therefore estimates are too low starting in September '15. We also see opportunities for CRUS to lever the same part into the Android channel, including a likely win in the Samsung Electronics' (SSNLF) GS6," analysts said.
"We believe CRUS will see content in the iPhone 6S next year increase and we believe CRUS' next-gen 55nm smart codec will integrate a low power DSP to enable 'always on voice.' The low power DSP allows the phone to always keep one of the phone mics on and then wake the phone up if a user makes a request," analyst noted.
Additionally, "CRUS can regain share in Android next year with its smart codec as OEMs look to add 'always on' capabilities - particularly Samsung," analysts said.
Separately, TheStreet Ratings team rates CIRRUS LOGIC INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate CIRRUS LOGIC INC (CRUS) 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 18.7%. Since the same quarter one year prior, revenues rose by 10.2%. 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.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, CRUS has a quick ratio of 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for CIRRUS LOGIC INC is rather high; currently it is at 51.18%. Regardless of CRUS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CRUS's net profit margin of 0.40% is significantly lower than 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 97.4% when compared to the same quarter one year ago, falling from $33.37 million to $0.85 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. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CIRRUS LOGIC INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CRUS Ratings Report