Cirrus Logic (CRUS - Snapshot Report) became a Zacks #1 Rank in early February after another big earnings beat when it reported for its fiscal 3rd quarter. The stock rallied 25% from $28 to $35 right into the company's Q4 report on April 28 when it delivered another monster beat and raised guidance.
My colleague Neena Mishra wrote about the key Apple (AAPL - Analyst Report) sound-technology supplier in her February Bull of the Day feature...
Cirrus Logic is a supplier of high-precision analog and digital signal processing components for a variety of audio, energy and industrial applications. The company has a strong intellectual property portfolio with 2,100 patents issued and pending, which has driven the development of more than 1,100 products.
CRUS supplies a complete audio solution from capture to playback. They also develop highly sophisticated embedded software solutions that help customers to differentiate their products with cutting-edge audio features, such as noise reduction, echo cancellation and voice enhancement.
Apple is reported to be their largest customer, accounting for 78% of the revenue in the recent quarter. Cirrus recently acquired Wolfson Microelectronics, which added some diversification to the revenue stream as Wolfson also supplies to Samsung and other Android phone makers.
The Sound of Another Great Quarter
While it appears many investors have been cautious about the heavily-weighted Apple-factor in Cirrus sales, the company continues to surprise them. Pacific Crest Securities analysts John Vinh and Kevin Chen were impressed with the big beat-and-raise results driven by strong Apple demand and share gains at Samsung.
They noted on April 28 that "Apple contributed 65% of revenue, or $166 million (+44% y/y, -29% q/q), driven by strong iPhone demand. Additionally, Samsung contributed 15% of revenue, or $38.3 million (+24.4% q/q), on share gains, as Wolfson's smart audio codec began ramping in the GS6."
The analysts also read-through on the raised F1Q16 (June) guidance of 6% revenue growth saying that it "implies a significant ramp up of GS6 revenue at Samsung and better-than-seasonal demand at Apple."
Piper Jaffray Boosts Estimates and Price Target
StreetInsider reported on April 29 that "Piper Jaffray analyst Ruben Roy reiterated an Overweight rating and boosted his price target on Cirrus Logic to $44.00 (from $38.00) following strong Q4 results and outlook on revenue diversification."
Roy commented, "CRUS reported FQ4 (Mar.) results that were well above expectations with revenue and adjusted EPS of $255M/$0.66 comparing favorably to management's guidance and consensus estimates for $232M/$0.47. The FQ1 (Jun.) quarter revenue guidance range is also well above expectations with a midpoint of $270M compared with the current consensus estimate for $222M.
"In its Shareholder's Letter, CRUS said that the strong start of the year would drive a leveling effect in Q2. The company continues to expect significant growth for its FY16. We think that seasonality has shifted somewhat given increased recent Android exposure but expect the company's core product sales to grow materially exiting C2015. We are adjusting our estimates higher and our PT goes to $44 from $38. We continue to recommend shares and reiterate our OW rating."
The firm raised FY 2016 EPS from $2.15 to $2.35 and FY 2017 EPS from $2.28 to $2.45.
If there were any doubts left about the ability of Cirrus Logic to capitalize on the success of Apple and other key players in the mobile revolution like Samsung and Google (GOOGL - Analyst Report), the company is silencing them with its deafening success. In my book, you buy all dips in the low $30s.
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