Linear Technology's Growth Rate Seen “At Risk”

Prudential’s Mark Lipacis yesterday morning downgraded shares of Linear Technology (LLTC) to Underweight from Neutral. He trimmed his price target to $33 from $37.

Lipacis also lowered earnings estimates for the company. For the June 2007 fiscal year, his GAAP estimate drops a nickel to $1.40; for ‘08, he comes down 6 cents to $1.60.

Lipacis sees the company’s growth rate “at risk,” asserting that the company is losing market share to other players in high performance analog chips. He also thinks gross margins look fragile, noting that the company has managed to keep margins at secular peak levels while its closest rival, Maxim (MXIM), has seen gross margins contract 800 basis points. Lipacis also notes that the company’s inventory days are up 26 days in four quarters and 33 days over two years.

Linear yesterday was down 49 cents at $38.25.

LLTC vs. MXIM 1-yr chart: