Shares of touch-controller chip maker Atmel (ATML) have recovered from a sharp selloff last night after the company said its revenue last quarter missed even its recently reduced forecast.
The shares are up 26 cents, or almost 3%, at $10.36, versus a 5% sell-off last night and a drop of almost 1% in this morning’s pre-market trading.
The company noted a one-time item, a delay in a payment from a distributor, but it also noted broader weakness in the market for its chips in the industrial sector and in China.
I would note that shares of competitor Cypress Semiconductor (CY) are up 86 cents, or 5%, at $18.11. Shares of competitor Synaptics (SYNA) are up $1.06, or 2.8%, at $38.39.
Steven Eliscu with UBS Securities this morning reiterates a Buy recommendation and cuts his price target by 50 cents to $15. He writes “we expect a bottom in 1Q12 and a recovery from 2Q,” but he also wonders whether the company can maintain a commanding position in “high-end” touchscreen controllers, and “what are the key competitive drivers of this leadership,” among other questions.
And Craig Berger with FBR Capital reiterates an Outperform on the stock and a $12.50 price target.
Says Berger, “Investors have long known ATML’s 4Q11 was tracking as weak; and, while 4Q11 is slightly worse than expected, this does not fundamentally change ATML’s investment thesis, predicated on growth in MCUs and touch at a reasonable price.”
Berger’s conversations with sources in the electronics supply chain indicate that Atmel is “still winning the lion’s share of designs for touch controllers in 2012,” he writes.
Regarding the competition, he writes,
While Synaptics is somewhat resurgent as a firm, we await more design-wi! n tracti on in handsets. Cypress seems to be at a lull. Silicon Labs does seem to be gaining some share, but Maxim and ILITEK are not likely to have an impact in 2012.
Berger thinks it’s possible the company will project $388 million to $403 million for this quarter’s revenue when it reports full results on February 8th. However, it looks like the Street consensus has already come down a bunch since last night, as the Q1 average estimate is now just $391.7 million, according to FactSet.
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