Shares of analog chip maker Maxim Integrated Products (MXIM) are up 66 cents, or 2.6%, at $26 this morning after Citigroup’s Terence Whalen this morning reiterated a Buy rating on the shares and raised his price target $2 to $32, and swapped it into the “Top Pick” slot, replacing Avago Technologies (AVGO), writing that the company’s won the business to supply power management ICs for Apple’s (AAPL) next iPhone model, which he refers to as the “iPhone 5.”
“A recent supply chain check confirms a mosaic theory we�ve been building the past few Qs, suggesting that MXIM has indeed won the power management slot in the upcoming iPhone5,” writes Whalen.
Whalen was referring to several clues, namely, that Maxim has tended to be able to parts into devices where Qualcomm (QCOM) is selling the baseband radio, as is the case in current iPhones; Qualcomm is reportedly having trouble with its own power controller chips in the iPhone; and “A recent supply chain check stated MXIM was actively preparing to ramp production for a new APPL power chip, which foots with iPhone5 timing.”
Whalen estimates that deal may ad $101 million to the company’s business next year. (The company makes about $2.4 billion a year in revenue), and another $110 million in 2013.
Today’s rotation of MXIM for AVGO is a bit in keeping with the fickle nature of support on the Street for chip companies riding Apple’s coat-tails. For example, Morgan Stanley’s Sanjay Devgan yesterday cut his rating on Avago’s stock to Equal Weight from Overweight, writing that “With the iPhone 4S design win behind it, we see limited wireless catalysts in the near-term.” Avago supposedly supplies the power amplifier in the iPhone 4S.
No comments:
Post a Comment