The woes of Apple Inc. (NASDAQ: AAPL) are spilling over into the Apple supply chain companies. Apple’s lack of upside was surprising to Wall Street, making many investors wonder if Apple’s China Mobile deal is simply too late to matter. This week came word that Oppenheimer was growing more concerned with Apple supplier shares as well.
Cirrus Logic Inc. (NASDAQ: CRUS) is one name that comes directly into play here. Cirrus was down 8% to $17.18 on Wednesday, after its earnings report. Cirrus managed to beat earnings handily, despite net income falling almost 40%. Sales guidance of $130 million to $150 million was more than $30 million short of expectations, even at the mid-point of the range.
Oppenheimer said that the company derives 80% to 85% of its total sales from Apple, and the firm believes that the revenue to the company already has started to decline with the production of the 5s and 5c model iPhones. Oppenheimer had an Underperform rating on the stock, and now it has slashed earnings estimates and targets after the poor report. Oppenheimer even said that it sees no valuation support in a year that it will be reinvesting in development of new chips.
Stern Agee maintained a Buy rating, but the firm lowered estimates. It talked about March quarter seasonality and a soft product demand outlook. The firm did say that, at 11 times the firm’s 2014 earnings estimates, the risk/reward remains attractive as Cirrus benefits from its largest customer’s upcoming product ramps and gains traction at other audio customers and in the LED lighting market. Sterne Agee’s price target is $22.00, down $2.00 from its prior view.
Canaccord Genuity also jumped on Cirrus. The firm maintained its Hold rating, mainly based on the notion that its growth remains elusive. Canaccord lowered the price target to $18 from $24.
We have not seen the note from Pacific Crest as of yet, but this firm reportedly now puts the fair value estimate down at $14 for Cirrus, as things will get worse before they get better.
Again, Cirrus should be bringing up concerns for other Apple suppliers who are heavily dependent on Apple. Cirrus shares were down more than 8.5% at $17.12 after the first 30 minutes of trading on Wednesday. The 2.7 million shares traded was already just above an average day’s whole trading volume.
The consensus price target was $23.69 on Tuesday, and that is down from much higher.