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Integrated Device Technology Doing Okay For Now

Stephen Simpson profile picture
Stephen Simpson


  • A small quarterly beat will help investor confidence a little bit, but IDT probably needs a couple more quarters before all of the drivers sync up.
  • Near-term opportunities in memory interface and wireless charging are meaningful, as are longer-term opportunities in auto and industrial markets.
  • Mid-single-digit revenue growth and non-GAAP operating margins around 30% can support a fair value in the low $30s.

Investors who’ve chosen to sit on the sidelines and wait and haven’t lost out on much when it comes to Integrated Device Technology (or “IDT”) (NASDAQ:IDTI), as the shares are down about 6% from when I last wrote about the company. Quite frankly, though, that’s been true for the sector as a whole and investors would have done better with IDT than with Broadcom (AVGO), Maxim (MXIM), ON Semiconductor (ON), Sensata (ST), or the SOX in general over the last three months, as investors have grown more concerned about whether there’s enough demand growth to sustain this extended run that chip companies have enjoyed.

My basic outlook on IDT really hasn’t changed much. Between its strong positions in data center memory interfaces and wireless handset charging, growth opportunities in sensors, and longer-term opportunities in communications, I believe IDT can outgrow many of its peers while generating good margins. With a fair value in the low $30s and some appeal as a buyout candidate, I think these shares are still worth considering even if it is getting late to play the semiconductor space.

Good Enough Results To Close Out The Fiscal Year

IDT did a little better than expected in the March quarter (the company’s fiscal fourth quarter). Revenue rose 28% yoy and more than 3% versus the prior quarter, coming in a little better than the sell-side had expected. The composition was a little different than expected, though, as Computing saw a high single-digit sequential decline (worse than expected) while Consumer and Auto/Industrial were both stronger than expected with 20%-plus sequential growth.

Gross margin was slightly better than expected, and up almost three points from last year, but management chose to spend a little more to support product growth. Even so, the double-digit sequential increase in operating profit (high single-digit increase in non-GAAP terms) wasn’t bad

This article was written by

Stephen Simpson profile picture
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Analyst’s Disclosure: I am/we are long AVGO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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