Stifel Upgrades Cirrus Logic To Buy, Sees $45 Upside On Coming Product Cycles

In a report published Thursday, Stifel analyst Tore Svanberg upgraded the rating on Cirrus Logic, Inc. CRUS from Hold to Buy, with a price target of $45. With the stock still 13 percent below its 52-week high, the analyst believes that investors have an opportunity to build their positions in "one of the fastest growing small-cap semiconductor growth stories."

The company posted a strong beat and raise quarter for Q2. Cirrus Logic has been able to achieve market expansion via organic growth, as well as the strategic Wolfson acquisition in 2014. This, the analyst believes, has in turn propelled the company's revenue to new highs.

"Cirrus is entering a significant product cycle over the next 12-24 months," Svanberg stated, while adding that despite not introducing any meaningful products last year, the company was able to grow its full year revenues by 28 percent.

Another positive in favor of Cirrus Logic is that although Apple Inc. AAPL accounted for a very high percentage of its revenue, the Wolfson deal has reduced Apple's contribution to 62 percent, with clear signs of Cirrus Logic "gaining traction across the Android platform with other top-tier OEMs," according to the Stifel report.

In addition, the company is migrating to the newer 55nm technology node, which the analyst believes would offer cost advantages and better scale with suppliers.

Analyst Svanberg does not believe that "CRUS should trade at such a discount especially considering it is outgrowing its peers by a wide margin."