- CIBC is reiterating their Sector Outperformer rating on Trident Micro (NASDAQ:TRID), while raising CY07 ests. & introducing CY08 forecast. Following a seasonal CY1Q, they expect TRID's image processing lead, peerless mid/high-range decode economics, & superior growth prospects, will be quite evident, to value & growth investors alike.
TRID has been under undue and incessant pressure for the past 3Qs, due to confusion over competition (BRCM, Mediatek, ZRAN, & ATI--non of which really compete with TRID), TRID's reticence (due to options-related 10K/Q delinquencies), and naturally declining, yet still sublime, gross margins.
In the report, the form elucidates why they believe investors & the cacophony of boorish bears are totally wrong about TRID, and why it will be a steal beyond C1Q:
- Firm believes that thus far, not a single Broadcom win has come at TRID's expense
- TV markets are bifurcating and TRID has laid claim to the mid to high end as others such as Taiwan Inc. battle at the low end.
- In spite of inevitable erosion, Trident s Gross and Operating Margins are still well-above the average (within the Digital Media Semiconductor peer group) and, as such, TRID should trade at a premium valuation rather than at a 30%+ discount. While gross margins are definitely coming down, and will likely see a high-4- handle in CY08, the firm believes that Trident should be an exception to the rule.
- TRID is on track to put its options review and management succession issues behind it in short order.
Along these lines, the firm increased their CY07 est. to $1.32 on $325M from $1.30/$320M, and established CY08 ests. of $1.80 on $450M. At ~13 new CY07E EPS of $1.32, TRID trades ~33% below peers' 20x. On the contrary, they believe TRID deserves a premium valuation, given its expanding domination of Tier-1 image processing (adding Philips in C2Q), and its growing- likelihood of similar success in HD decode during CY08.
Reits Sector Outperformer and $25 tgt.
Notablecalls: Would not be surprised to see some buy interest following the call. But also but sure to check out comments from TXN.
TRID has been under undue and incessant pressure for the past 3Qs, due to confusion over competition (BRCM, Mediatek, ZRAN, & ATI--non of which really compete with TRID), TRID's reticence (due to options-related 10K/Q delinquencies), and naturally declining, yet still sublime, gross margins.
In the report, the form elucidates why they believe investors & the cacophony of boorish bears are totally wrong about TRID, and why it will be a steal beyond C1Q:
- Firm believes that thus far, not a single Broadcom win has come at TRID's expense
- TV markets are bifurcating and TRID has laid claim to the mid to high end as others such as Taiwan Inc. battle at the low end.
- In spite of inevitable erosion, Trident s Gross and Operating Margins are still well-above the average (within the Digital Media Semiconductor peer group) and, as such, TRID should trade at a premium valuation rather than at a 30%+ discount. While gross margins are definitely coming down, and will likely see a high-4- handle in CY08, the firm believes that Trident should be an exception to the rule.
- TRID is on track to put its options review and management succession issues behind it in short order.
Along these lines, the firm increased their CY07 est. to $1.32 on $325M from $1.30/$320M, and established CY08 ests. of $1.80 on $450M. At ~13 new CY07E EPS of $1.32, TRID trades ~33% below peers' 20x. On the contrary, they believe TRID deserves a premium valuation, given its expanding domination of Tier-1 image processing (adding Philips in C2Q), and its growing- likelihood of similar success in HD decode during CY08.
Reits Sector Outperformer and $25 tgt.
Notablecalls: Would not be surprised to see some buy interest following the call. But also but sure to check out comments from TXN.
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