RF Micro (RFMD) shares got a lift Friday from American Technology Research analyst Mark McKechnie, who launched coverage of the maker of mobile phone chips with a Buy rating and a $10 target.
McKechnie says the company should report a “solid” September quarter, driven by strong growth in demand for 3G handsets at Nokia (NOK) and Samsung. (Nokia accounts for more than 50% of the company’s revenue). He notes that the stock has moved up about 15% in the last several weeks - no doubt helped by positive comments from J.P. Morgan, Morgan Stanley, and Citigroup - but notes that it is nonetheless 20% off its 52-week high. McKechnie says he views the company as a “pure play on RFMD’s exposure to handsets,” along with upside from its pending acquisition of Sirenza (SMDI).
McKechnie is looking for September quarter results to come in at the high end of current guidance of 6-7 cents a share and revenue of $230 million to $245 million. For the December quarter, he sees $275 million and 9 cents. He sees EPS of 31 cent a share this year and 38 cents next year, and says it has “earnings power” of 50 cents for 2010, assuming completion of the Sirenza deal.
RFMD 1-yr chart: