Microsemi Corp. (NASDAQ:MSCC) hasn't done that well since my last update
on the company. While the shares were at least up in that intervening
period, they've underperformed the PHLX Semiconductor Index by a little
and particular names like Texas Instruments (NASDAQ:TXN), Semtech Corp. (NASDAQ:SMTC), and Silicon Labs (NASDAQ:SLAB)
by a whole lot more. To a limited extent, maybe this is just "Microsemi
being Microsemi" - I've owned and/or followed this name for a long
time, and it always seems to zig when others zag. On the other hand,
investors may be legitimately concerned about the level of debt the
company has to manage now as well as the uncertainties regarding
revenue, margins, and cash flows as the company moves through its
initial stages of integrating PMC-Sierra.
My post-earnings model
adjustments lead to a lower fair value, which is bad, but I still
believe the shares are undervaluing what can be a strong mid-teens FCF
growth story for many years to come. With a fair value range from the
high $30s to the low $40s, I still think these shares offer enough
upside for investors to consider.
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When The Dust Settles, Microsemi Should Continue To Stand Out
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