XLNX Rising: Upbeat Analyst Day Lifts Estimates, Some Targets

Shares of programmable chip maker Xilinx (XLNX) are up 25 cents, or 0.7%, at $37.44 following the company’s analyst day meeting in New York yesterday.

The response today seems to be largely positive to the company’s talk of gaining share versus competitor Altera (ALTR) and Lattice Semiconductor (LSCC), but also the prospects the company laid out for taking away business from traditional application-specific integrated circuits (ASIC) and application-specific standard products (ASSP).

Altera shares are down 13 cents, or 0.4%, at $35.01. Today’s bullishness comes despite Altera’s announcement last week it will partner with Intel (INTC) to develop the next generation of FPGAs at 14-nanometer line widths.

Anil Doradla, William Blair: Reiterates an Outperform rating, writing “Not only did management provide an operating expense outlook that was well below Street expectations, but it also highlighted the beginning of a multiyear capital spending cycle and its leadership in the 28 nanometer (nm) process node via design win activities [�] While there may be an element of skepticism regarding management�s bullish outlook on capital expenditure trends, we believe Xilinx�s leadership in leading-edge 28 nm products (implied 60%-plus market share), 80% design win rate in radio systems, and success of its 3-D integrated circuits (ICs) and Zynq products (especially recapturing Altera�s stronghold of industrial) will win over skeptics.” Doradla keeps intact this year’s estimates of $2.16 billion and $1.74 but raised 2014′s EPS estimate to $2.14 from $2.10, on revenue of $2.4 billion.

Hans Mosesmann, Raymond James: Reiterates an Outperform rating and raises his price target to $42 from $39. “While the company backed away from its previous assertion of 70% 28nm market share, 28nm growth is outpacing 65nm and Xilinx expects share gains in FY14. Ultimately, we believe 28nm is much closer than 40nm and is still up for grabs. The more important dynamic is displacement of the ~$50+ billion ASIC/ASSP (application-specific integrated circuit/application-specific standard product) market vs. the ~$6 billion field programmable gate array (FPGA) market, which should drive double-digit growth over time. We see growth opportunity for both Altera and Xilinx in this oligopoly.” Mosesmann kept intact his estimate for this year of $2.17 billion and $1.78 per share, while raising his 2014 estimate to $2.28 billion and $1.92 from a prior $2.27 billion and $1.80.

Daniel Berenbaum, MKM Partners: Reiterates a Neutral rating, and a $34 “fair-value estimate.” “Management guided FY14 opex flat with FY13 (which drives some modest upside to our/consensus EPS estimates) and guided for a revenue CAGR in the 8%-12% range through FY16 (our sense is some were hoping for something closer to 15%+, particularly off a disappointing FY13 base, but roughly in line with our estimates). The company is executing well in what management views as an �integrate or be integrated� business, but with the stock trading at 17x our FY14 EPS estimate, it appears as though it�s pricing in a lot of good news.” Berenbaum maintains his 2013 estimate for $2.17 billion and $1.74 per share, while raising his 2014 EPS estimate to $2.17 from $2.04 on the same $2.39 billion in revenue.