LTX: Improvement at Texas Instruments Could Mean Order Pick-Up

 |  Includes: LTXX, TXN
by: Eric Savitz

Semiconductor test equipment maker LTX (LTXX) got a big boost Friday from Patrick Ho, an analyst at Stifel Nicolaus.

Ho raised his rating on the stock to Buy from Hold, and set a price target of $9.

Ho provides five reasons for his upgrade:

  • Test industry appears to be at a bottom (though he admits no turnaround is imminent).
  • Back-end segment (test and assembly) generally leads the front end by a couple of months on both ends of the cycle.
  • Improvement at Texas Instruments (NYSE:TXN), LTX’s largest customer, could lead to order pick-up. (See today’s earlier post)
  • Downside on the stock is limited versus potential upside.
  • Business model, balance sheet have been strengthened.
  • While we are not calling for an immediate turnaround, we believe the industry is at or very near a fundamental bottom and we see limited downside potential for the stock at current prices. Should the industry turn, and given the company’s enhanced business model, we believe there is much greater potential in the next upturn, which should also reflect favorably for the stock price.

    LTX shares Friday were up 52 cents, at $6.63.