Why Shares Of Apple Supplier Cirrus Logic Look Compelling

Cirrus Logic, Inc. CRUS shares have pulled back following the release of the company's fiscal year's fourth-quarter results last week. An analyst at Needham finds the stock attractive at current levels.

The Cirrus Analyst: Analyst Denis Pyatchanin upgraded shares of Cirrus from Hold to Buy, with a price target of $73.

The Cirrus Thesis: Cirrus shares have declined 26% from their mid-January peak and the multiple has compressed by about 40%, analyst Pyatchanin said.

The company's disappointing results and guidance were attributed to revenue recognition timing, the analyst said. The lead times for its camera controllers for use in camera modules, the analyst said, are shorter than the rest of its components, such as smart codecs shipped to contract manufacturers, and are therefore shipped earlier.

The 11% quarter-over-quarter revenue drop forecast for the June quarter is within the normal seasonality, Pyatchanin said, citing the company.

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New opportunities are emerging, including potential content gains at Apple Inc AAPL, with a new Power IC and $1 ASP that will likely be part of flagship phones in fall 2021, the analyst said.

The analyst estimates that Apple iPhone dollar content will grow about 20% to $5.20, starting in the second-half of 2021.

Cirrus is also leveraging its high-performance, mixed-signal expertise beyond the audio domain, the analyst noted.

"Net, we expect revenue growth to accelerate in FY22 and believe the stock is compelling here," Needham said.

CRUS Price Action: Cirrus shares were up 0.60% to $73.44 Tuesday morning. 

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(Photo: Cirrus Logic)