Weekly Tech Update: BRCM, AMD, CREE, TXN, FFIV

The semiconductor industry has been one of the strongest performing sectors in 2014, driven by the continued strength in personal, network and service provider communications, and increasing electronics adoption around the world. The Philadelphia Semiconductor Index (SOX) is up almost 30% year-to-date,  as compared to a 12% growth in the S&P 500 index during the same period. According to The Semiconductor Industry Association (SIA), the year-on-year global semiconductor sales increased for the eighteenth straight month in October, growing by 9.6%. SIA projects nearly double-digit growth in 2014, as semiconductor sales continue to be strong across the board, with nearly all regions and product categories exhibiting increases. However, its anticipates moderate growth in 2015 and 2016. ^[1]

Below is a weekly update for some of the technology companies that Trefis covers.

See Our Complete Analysis for These Companies Here

Broadcom

Last week, Broadcom (NASDAQ:BRCM) announced a new series of high performance multi-rate gigabit physical layer transceivers (PHYs), introduced the industry’s first GPS-enabled satellite outdoor unit (ODU) device and the first high speed 4-level Pulse Amplitude Modulation (PAM-4) PHY. (Read Press Releases)  The company also launched a new set-top box platform for the Mexican market. (Read: Broadcom Launches A New Platform To Benefit From Mexico’s Analog-to-Digital TV Transition)

Broadcom’s stock price traded close to $43 last week.  Our valuation of $41 for the company is only marginally lower than the current market price. Broadcom’s current market cap stands at around $23 billion. Our 2014 revenue and net income estimates for the company stand at $8.4 billion and $660 million, respectively. Our non-GAAP diluted EPS forecast is $2.86, as compared to the market consensus of $2.92.

AMD

AMD (NYSE:AMD) appointed James A. Clifford, who previously served as the vice president of global sourcing and foundry technology at RF Micro Devices, as senior vice president of its global operations. The company also announced a significant update to its CodeXL unified tool suite for developers designed to accelerate applications running on AMD processors. (Read Press Releases)

AMD’s stock price has been on a downhill trend since August 2014. Last week, the stock traded between $2.50 – $2.60.   Our valuation of $4 is at an approximate 60% premium to the current market price. The company’s current market cap is around $2 billion. We forecast AMD’s 2014 revenue to increase to $5.3 billion and net income to turn positive by year end.

CREE

Cree (NASDAQ:CREE) announced the commercial availability of the industry’s first extreme high power LEDs, which enables a system cost reduction of up to 40% for lighting applications. (Read Press Release) Cree’s stock, which has declined almost 50% so far this year, traded around $34 last week. We value the company at $41, which is at a 30% premium to the current market price (market cap of $3.7 billion). For calendar year 2014, we forecast Cree’s revenue and net income at $1.68 billion and $93 million, respectively. For fiscal year 2015 (ended June), we estimate non-GAAP diluted EPS of $1.57 as compared to the market consensus of $1.65.

Texas Instruments

In a press release this week, Texas Instruments (NASDAQ:TXN) announced that it is enabling the newest consumer products on display, ranging from next-generation advanced driver assistance systems (ADAS) to innovations for the Internet of Things (IoT) and wearable technology, at the upcoming 2015 International Consumer Electronics Show (CES) next month. TI’s stock traded around $54 last week. Our valuation of $45 for TI is approximately 15% lower than the current market price. TI has a market cap of $57.5 billion. We expect the company to report revenue and net income of $13.1 billion and $2.8 billion this year, respectively. Our GAAP diluted EPS forecast for TI stands at $2.59 while the market consensus is at $2.51.

F5 Networks

Last week, analyst firm Dell’Oro Group announced that F5 Networks’ (NASDAQ:FFIV) share in the Application Delivery Controller (ADC) market increased to 52% in the third quarter of calendar year 2014. F5 network announced that it will release its Q1 2015 results on January 21, 2015. Our price estimate of $124 for F5 Networks is just slightly lower than the current market price. F5 has a market cap of approximately $10 billion. We expect the company to witness double digit growth in its revenue for calendar 2014. Our non-GAAP diluted EPS estimate for fiscal year 2015 (ending September) stands at $6.07, as compared to the market consensus of $6.27.

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1. Global Semiconductor Sales Increase In October, Substantial Growth Projected for 2014, SIA, December 2, 2014 [↩]