CRUS - Embedded Expectations Analysis - 2020 12 16
Cirrus Logic, Inc. (CRUS:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 17.7x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about their products, component demand, and android market expansion suggest the potential for near-term headwinds, equity outperformance remains warrantedSpecifically, management may have concerns about their ability to reach expected run rate in closed-loop controller sales, and about the potential of their new smart codec for wireless headsets. In addition, they may lack confidence in their ability to expand in the android market and improve the ASP of their first-generation power conversion and control IC. Additionally, they may be exaggerating the demand for components across the portfolio
Although management's concerns about their products, component demand, and android market expansion suggest the potential for near-term headwinds, market expectations are too bearish given the firm's long-term competitive advantages, and equity outperformance is likely for CRUS
Cirrus Logic focuses on low-power integrated circuits (ICs) for audio, voice and other signal-processing applications. The company's product lines include: Portable Products, including codecs, which are chips that integrate analog-to-digital converters (ADCs) and digital-to-analog converters (DACs) into a single IC, smart codecs, which are codecs with digital signal processing integrated, amplifiers, micro-electromechanical systems microphones, haptic drivers, standalone digital signal processors, and its SoundClear? technology, which includes a portfolio of tools, software and algorithms; and Non-Portable and Other Products, which include ICs, codecs, ADCs, DACs, digital interfaces and amplifiers.
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