IDTI 44 target 125
cnetinvestor.com
* Integrated Device Technology (IDTI)
$44.94 - $5B mkt cap: Positive Mid-Quarter Update; Reiterate Strong Buy & $125 Price Target
· Yesterday, the company held its mid-quarter update and reaffirmed its 3Q:01 guidance of $0.86 and
also reassured investors that the company is seeing no changes in order patterns from any of its
large customers, including Cisco, and that it continues to operate "business as usual."
· Based on the normal turns rate the company is expecting for the quarter, it continues to expect
record revenues (we are at 7.2% q/q growth) as well as gross margins to be greater than 60% (we are
at 61.5%). The company highlighted that they are currently generating free cash flow at a rate of $1M
a day, which is unprecedented for a company its size!
· The company echoed Cisco's positive outlook (from its recent conference call) and continues to see
strong growth opportunities in its core business areas of IP routing, basestations, broadband, 3G
wireless, and other networking infrastructure related areas.
· The company is expecting tremendous growth from its new products (such as TSI switches, IP
co-processors, clock management devices, FIFOs, dual-port memories, etc.) as IDT has already
obtained substantial design wins from the likes of Cisco, Nortel, and Lucent and is projecting a
greater than $300M contribution to next year's top line number.
· On the commodity SRAM front, the company mentioned that they continue to get expedites from
their customers indicating to us that demand is pretty healthy while supply is not catching up such
that ASPs are holding firm.
· The stock at current price levels is extremely cheap. Currently trading at 12.5x our calendar year
2001 EPS estimate, IDT represents a compelling value, as we believe the company continues to
maintain its footprint in the right communications end market segments. We are reiterating our
STRONG BUY rating and our $125 price target.
· We would be aggressive buyers of the stock at current price levels. |
