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Summary

  • The company beat on the top line but missed on the bottom line.
  • It’s been a rough year, but we remain bullish on the company's long-term prospects.
  • We expected the company to start beating expectations thanks to LTE rollout, but it’s just taken longer than expected.

Peregrine Semiconductor (NASDAQ:PSMI) managed to post 2Q earnings of a $0.12 per share loss (missing consensus of a $0.11 loss) and revenue managed to beat by over 5%. But revenues did come in below 2Q 2013, with revenues for last quarter coming in at $47.1 million, below $52.4 million from the same quarter last year.

However, what drove the revenue beat was the growth of LTE smartphones across the globe. Management expects revenues for 3Q to come in between $40 million and $43 million, compared to consensus of $41.7 million.

We first covered Peregrine back in November. Shares are down 15% since our article. We still have a $16 price target. The company trades at just 1.2x sales and just over 5x cash. As we noted, one of Peregrine's key growth theses is,

...the growing demand for increased data traffic. Mobile operators are continuing to roll out new LTE markets as the demand for mobile data increases. Currently, there are about 175 live LTE networks with 249 more planned. How this plays into Peregrine's business is that Peregrine's high performing switches are the preferred solution for increased LTE spectrum. More frequency bands means more switches per phone and that is Peregrine's specialty. Overall, LTE is a major opportunity for Peregrine and we see this tailwind driving revenues going forward.

Source: Update: Peregrine Semiconductor Earnings