Why did Oppenheimer Downgrade Cirrus Logic’s Stock?

By Carrie Williams

Cirrus Logic (NASDAQ: CRUS) received a Hold rating from Oppenheimer analyst Rick Schafer yesterday. The company’s shares closed yesterday at $54.08.

Schafer wrote:

“We are downgrading shares of CRUS to Perform and removing our $70 target. Our CY17 estimates are unchanged, and valuation remains favorable, but we see no obvious upside EPS catalysts driving shares NT. In our view, CRUS’ content story with premium-tier smartphone OEMs likely takes a pause this year following content loss in the GS8 and stalling content NT at Apple. CRUS has ample LT growth drivers, including digital headsets, MEMS mics, voice biometrics and growing China OEM penetration, but these remain nascent and unlikely to drive upside in 2017. With valuation in line with historical levels, we believe risk/reward is balanced and step to the sidelines until upside catalysts become clear.”

According to TipRanks.com, Schafer is a top 100 analyst with an average return of 16.7% and a 73.7% success rate. Schafer covers the Technology sector, focusing on stocks such as Adesto Technologies Corp, Advanced Micro Devices, and Applied Micro Circ.

Cirrus Logic has an analyst consensus of Moderate Buy, with a price target consensus of $67.

Based on Cirrus Logic’s latest earnings report for the quarter ending December 31, the company posted quarterly revenue of $523 million and quarterly net profit of $122 million. In comparison, last year the company earned revenue of $348 million and had a net profit of $41.38 million.

Based on the recent corporate insider activity of 75 insiders, corporate insider sentiment is negative on the stock. Last month, Randolph Carlson, the VP Supply Chain of CRUS sold 17,880 shares for a total of $1,000,744.

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Cirrus Logic, Inc. develops high-precision, analog and mixed-signal integrated circuits for a broad range of innovative customers. It builds a diverse analog and signal-processing patent portfolio. The company delivers optimized products for a variety of audio, industrial and energy-related applications. It has offices in the United States, United Kingdom, Sweden, Spain, Australia, Japan and Asia. The company’s product lines include Portable Audio Products and Non-Portable Audio and Other Products. Cirrus Logic was founded by Suhas S. Patil and Michael L. Hackworth in 1984 and is headquartered in Austin, TX.