RBC Capital Markets analyst Doug Freedman increased his price target
on shares of Altera Corp. (NASDAQ:ALTR) to $40 from $39, while
maintaining "Sector Perform, Above Average Risk" rating.
After the company's first quarter results, the brokerage raised its
2012 EPS estimate to $1.69 from $1.67 and its 2013 estimate to $2.14
from $2.03. The firm lowered its 2012 revenue estimate to $1.820 billion
from $1.834 billion, while lifting its 2013 estimate to $2.255 billion
from $2.190 billion.
The company's Q1 revenues of down 16% sequentially reflected
broad-based inventory reduction across most of ALTR's markets, with more
precipitous declines in Telecom & Wireless (down 20% sequential)
and Industrial Automation/military/auto (down 21%), in addition to
less-than-favorable mix. Given the sharp expected turn-around in Q2,
some investors may suspect the company pushed some revenues out one
The company expects double-digit growth across most segments, largely
reflecting restocking. In the wireless and wireline segment, inventory
burn is largely over. That said, management believes there remains
The strength in Q2 was described as a return to demand levels, which
in the analyst's view could mean that to meet his second half growth
forecast he will need similar demand growth.
acknowledged supply concerns although believing it has sufficient 28nm
supply in Q2. Freedman highlighted that 40nm supply is, to a degree,
being adversely impacted by 28nm demand, as both nodes run on the same
production line. The company continues to estimate that it has about 65%
of market share on 28nm with $3 million in Q1 sales.
Through the current correction, it seems Xilinx Inc. (NASDAQ:XLNX)
did not lose as much share as it appeared in 2011. In addition, both
companies' 28nm line-up appears more competitive.
In the analyst's
view, while it may be difficult for Altera to sustain the same
advantages/lead on 28nm as the company has on 40nm, the increasing
market size should provide plenty of room to reach his longer-term
ALTR closed Friday's regular session down 8.44% at $35.25.