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 (NYSE: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 (OTCQB: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: