CSFB on PMCS:
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PMC-Sierra (PMCS-$228 15/16-Cap $38.6B-Strong Buy)
Boring is Good, as PMCS Reports Yet Another Stunner; $0.23 EPS on 30% Sequential Growth!
FY00E:$0.95 / FY01E: $1.42 Previous: $0.78 /$1.17
· As has been its trend over the last two years, PMCS blew out another quarter, reporting $0.23 on a pro forma basis for 1Q00 (vs. consensus of $0.19). Revenue grew 30% sequential growth to $134 MM, easily beating our earnings preview expectations of 25-28%.
· PMCS continued its acquisition spree, purchasing Malleable, Datum, and QED in the last six weeks. PMCS gets engineering talent (i.e. Malleable), and expertise in untapped but complementary markets (Datum-wireless infrastructure; MIPS based-network processors).
· Revenue growth guidance of 15% is essentially a repeat of the last two quarters, when management gave a similar conservative sequential growth forecast, but by mid-quarter it was evident it would exceed 20%.
· We reiterate our Strong Buy, increasing 2000 estimates to $0.95 (formerly $0.78) and 2001 EPS to $1.42 (from $1.17). Modeled revenue was increased to · $570 mm for 2000 (formerly $500 mm) and a “conservative” $915 mm for 2001 (formerly $760 mm).
We are increasing our price target to $300, with plenty of upside. |
