Xilinx: Street Estimates May Be Too Conservative

Lehman’s Tim Luke yesterday raised his rating on Xilinx (XLNX) to Overweight from Equal Weight, and raised his price target on the stock to $30 from $28.

Luke cited improving bookings and cost reduction targets, capital restructuring and new products. He says Street estimates “may be conservative.” The company had guided to 2% growth in the March quarter, but Luke says better bookings and stabilization in programmable logic device demand from the communications sector could lead to upside in the quarter.

The stock, he says, has a valuation below both recent ranges and historical levels.

Luke also had an upbeat note on Xilinx rival Altera (ALTR), raising his price target on the stock to $24 from $23, though he maintained an Equal Weight rating. He sees an in-line March quarter, but long-term terms sees “solid fundamental trends” and cost-cutting initiatives.

Yesterday, Xilinx was up 53 cents at $26.18, while Altera was up 29 cents at $20.99.

XLNX vs. ALTR 1-yr chart