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Technology Stocks : CYPRESS Semiconductor (CY) -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (2545)	5/22/2006 11:57:01 AM
From: professor	Respond to of 2694

The UBS analyst upgraded his rating on CY to BUY today based on channel checks showing "improving visibility and product cycle opportunities extending into the second half of the year". This is another clue that CY is attractive here while investors seem to be worried. The analyst cites solid PSoC sales, SRAM memory demand and gross margin improvement. They're raising 2007 eps to 69 cents from 64 cents on revenue of $1.2 billion. 2006 eps goes to $.42 on revenue of $1.05 billion. The price target is $20 which is a healthy 30%+ gross return from here around $15. What's new here is the channel checking of PSoC sales which indicates the strong demand for product. The demand for product inside new generation video/wireless products is real and CY is well positioned. VISIBILITY is the key here that is underpinning the improvement of eps. Another excellent point made by the analyst is that gross margin improvement will become apparent this year. The company "has only transitioned 12% of its memory bit production to the 90nm process node and aims to achieve 80% by year end. Also, capital expenditures drops sharply because they've already made their investment into 65nm process technology which should be adequate for awhile. Thus, eps will improve QOQ which the market will reward as it actually happens. The company's stake in SunPower is well documented. The demand for solar cell is extremely strong and highly unlikely to change. SPWR may be in weak hands (hedge funds) who are forced to liquidate for short run reasons right now. CY looks very attractive here and the UBS analyst is right on target in my opinion.