Technology
Has Integrated Devices Been Punished Too Hard by Investors and Analysts Alike?
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Integrated Device Technology Inc. (NASDAQ: IDTI) has had a bad week. So bad that some investors have to be wondering if there was a broad overreaction on the news. The chip component maker’s third-quarter earnings were in line with estimates. This might be fine for many companies, but it effectively ended IDT’s nearly two-year-old habit of beating earnings estimates.
24/7 Wall St. took a look at the news and at the analyst calls after the news. Trying to call a bottom on anything in a highly volatile market is more than tricky. This is not an attempt to call a bottom. Still, with such a sharp drop and with valuations now well below the broader market, some investors may want to consider what IDT’s prospects are for the long haul.
Its $0.35 in earnings per share (EPS) was equal to estimates and up from $0.25 previously. Sales were up about 5% on its communications sales, and its gross margin was roughly 63%. Guidance of about $187 million in sales and $0.32 to $0.34 in EPS was shy of the consensus estimates of $196.3 million and $0.36 EPS, respectively.
Several brokerage firm analysts were cautious with downgrades or negative calls, but Wedbush Securities decided to go out on a limb and raise its rating to Outperform from Neutral with a $27.00 price target.
Bank of America Merrill Lynch downgraded the stock to Neutral from Buy and lowered its price objective to $26 from $31. Weaker communication sales were telegraphed after two quarters of outsized growth. There was also an enterprise/data center slowdown ahead of new Intel launches. Still, IDT is considered to have solid execution and free cash flows.
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