Cirrus Logic, Inc. (NASDAQ:CRUS) — This developer and manufacturer of high-precision analog and mixed-signal integrated circuits is estimated by the Standard & Poor’s Capital IQ analyst to almost double earnings in fiscal year 2017, from $1.87 to $3.65. Revenue growth of 20% is forecast for FY 2017 and 13% in FY 2018.
High momentum is expected to accrue to CRUS stock from the mid-tier smartphone space, an area where Cirrus has limited penetration now. 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 60% of its revenues.
In late October, S&P retained a four-star “buy” on CRUS with an increase in their target price of $5, to $60 per share. The company beat the September quarter EPS of $1.05, reporting $1.35 with a sales increase of 40%, which also crushed the S&P estimate. Higher-than expected demand for the iPhone 7 appears to be the reason for the increase, which is in the mid-tier market that CRUS is targeting.
Technically, CRUS is in a powerful bull market, enforced by a step-up to a new bull channel in late July. The step-up occurred with a break-away gap from $42.88 to $46.00. The stock has been trading within about a five-point range since then and is supported by its 50-day moving average, now at $54.19. Accumulation has been above average, and the MACD indicator flashed a new buy signal coincident with a new high on Monday.
Since a minor reversal occurred yesterday on very low volume, it may be possible to buy CRUS at about $55 with a target price of $65 for a proposed return of over 18%.