While semi stocks are anticipating volatility following Donald Trump's unexpected presidential victory, Microsemi (MSCC) could be among the biggest beneficiaries given its exposure to defense spending, according to industry analysts.
"We think Microsemi will benefit the most given its 20%+ exposure to Aerospace and Defense given Trump's positive stance on the military," wrote RBC Capital Markets analyst Mitch Steves in a Wednesday note.
"If additional dollars are allocated to defense budgets, Microsemi could see an outsized benefit relative to other semiconductor companies with minimal exposure to this end-market," he further said, adding that Microsemi's gross margins for the aerospace and defense segments are above its average margins, clocking in at between 70% to 80% in comparison to the average of 63%.
Aliso Viejo, Calif.-based Microsemi has diversified the range of end-markets it serves over the years, but it still is known for its strong presence in the military end-market, said Raymond James analyst Steve Smigie by phone.
Other chipmakers with exposure to the defense industry include Intersil (ISIL) , Qorvo (QRVO) and Infineon Technologies' International Rectifier, Smigie said, adding that Maxim Integrated Products (MXIM) also has a decent amount of exposure to the security sector.