Stock of the Day: Cirrus Logic (CRUS)

Earnings were $0.22 EPS and revenue was $99.0 million. The estimates were $0.21 EPS and roughly $100.9 million on the same non-GAAP basis. Gross margin rose by 230 basis points to 54.0%, but operating margin fell almost 5 points down to 10.6%.  What is driving shares so much higher is that the company targeted 70% to 90% sequential revenue growth, which is being tied to Apple for audio and energy-use chips.

The analyst team at Canaccord Genuity sent us a note this morning saying that the firm was reiterating a BUY rating but it raised the target to $43 from $35 on the share price. The valuation basis: “Cirrus is approximately 12x our C2013 EPS estimate of $3.27 plus net cash of $2.43/share, compared to an 11x multiple net of cash for our coverage universe.” Canaccord also said it now expects another bonus in that sequential revenue growth in the fourth quarter will hit 25%.

Cirrus Logic usually trades about 2 million shares in a day, but with more than two hours until the close we have already seen over 10.5 million shares traded today. The gain of almost 23% compares to Monday’s close of $29.84 and compares to a 52-week range of $12.52 to $31.23.

The current market cap is just over $2.3 billion for Cirrus Logic.

JON C. OGG