Cirrus Logic, Inc. (NASDAQ:CRUS) — I last reviewed this developer and manufacturer of high-precision analog and mixed-signal integrated circuits on Nov. 23, 2016, suggesting that it be bought on a pullback to $55. The stock fell to under $55 in several days, then popped to over $64 on Feb. 1.
In November, Standard & Poor’s Capital IQ forecast that fiscal year 2017 earnings would almost double from $1.87 to $3.65. However, on Feb. 2, they raised their FY 2017 EPS estimate to $4.35 and FY 2018 to $4.48 from $4.41. The increase was the result of CRUS’s December quarter coming in at $1.87, beating the Capital IQ quarterly consensus of $1.62. Sales rose 50%.
High momentum is expected to continue to accrue to CRUS from the mid-tier smartphone space, an area where it has had limited penetration. But new product releases aimed at the mid-tier area are expected to broaden CRUS’s stance while retaining its largest customer, Apple Inc. (NASDAQ:AAPL), which currently accounts for 85% of its revenues.
Technically, CRUS is in a powerful bull market, and is currently consolidating following the run to over $64. The consolidation has support at $52 to the 50-day moving average at $56.33. Flat volume along with the 20-day moving average at $54.76 tells us that we may have an opportunity to again buy this stock at $55 with a trading target of $65.
However, if buying volume picks up, traders may have to go in at the current market price. Investors seeking a long-term objective should consider this mid-cap semiconductor leader for participation in the growing IT sector.
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