On Tuesday, CFRA made a notable adjustment to the financial outlook for Cirrus Logic shares (NASDAQ:CRUS), a prominent supplier of audio and voice integrated circuits. The firm has increased the 12-month price target on the company's shares to $150.00, up from the previous target of $105.00, while maintaining a Hold rating on the stock.
The revision is based on a new price-to-earnings (P/E) ratio of 21 times CFRA's calendar year 2025 earnings per share (EPS) estimate of $7.14. This P/E ratio is positioned below that of Cirrus Logic's peers but above its historical average.
The analyst's optimistic stance reflects an anticipation of improving fundamentals, driven by expectations for increased unit growth of Apple (NASDAQ:AAPL) hardware. Apple's sales have been a significant source of revenue for Cirrus Logic, recently comprising 86% of the total.
CFRA has maintained its fiscal year 2025 (ending in March) EPS estimate for Cirrus Logic at $6.51, which stands above the consensus. Moreover, the firm has raised its fiscal year 2026 EPS projection to $7.26 from the prior estimate of $6.82.
The firm's positive outlook is further supported by Cirrus Logic's potential in expanding markets, such as laptops, and the development of new technologies like the next-generation custom boosted amplifier and the company's first 22nm smart codec. These innovations are expected to be incorporated into multiple future generations of smartphone devices, enhancing the company's product visibility.
Despite the positive aspects, CFRA notes that the risk of revenue concentration is likely to persist for some time, given the company's heavy reliance on Apple. However, the firm acknowledges Cirrus Logic's robust relationship with Apple and highlights its strong financial position, citing a net cash balance of approximately $700 million, equating to more than $12.50 per share, and the absence of debt.
CFRA's updated target reflects a cautious optimism, suggesting that while the fundamentals are improving, the market has already recognized some of this potential, as seen in the recent appreciation of Cirrus Logic's share price. The firm posits that significant additional upside may be limited until the company can demonstrate a more diversified customer base.
In other recent news, Cirrus Logic has been making headlines with several significant developments. KeyBanc recently raised its price target for the company, citing optimism about Cirrus Logic's involvement with the upcoming iPhone 16.
The firm's confidence is based on the anticipated improvement in build expectations for the iPhone 16 and the potential incorporation of a haptics driver from Cirrus Logic in the new model's camera button.
Cirrus Logic has also unveiled a new series of digital-to-analog converters and an audio CODEC, designed for the professional audio market. These devices offer superior analog functionality and digital integration. Significant changes in the company's board and financial leadership have also been announced, with the nomination of William D. Mosley to the board of directors and the appointment of Ulf Habermann as interim CFO.
In terms of analyst notes, Stifel maintained its Buy rating on Cirrus Logic shares, expressing confidence in the financial strategy under the new CFO. However, Benchmark downgraded the company's stock from Buy to Hold, citing the current stock price as fair value. These are among the recent developments shaping Cirrus Logic's trajectory.
InvestingPro Insights
Following CFRA's recent price target update for Cirrus Logic (NASDAQ:CRUS), current data from InvestingPro offers additional context for investors. With a market capitalization of $7.58 billion, the company's P/E ratio stands at 28.04, indicating a valuation that takes into account its earnings potential. Notably, Cirrus Logic holds a PEG ratio of 0.46 for the last twelve months as of Q4 2024, suggesting that the stock may be undervalued relative to its earnings growth. This aligns with CFRA's perspective on the company's improving fundamentals and growth prospects.
InvestingPro Tips highlight that Cirrus Logic is trading near its 52-week high, with the price at 99.48% of this peak, reflecting strong investor confidence. Additionally, analysts have revised their earnings estimates upwards for the upcoming period, reinforcing the positive outlook on the company's financial performance. With six more InvestingPro Tips available for Cirrus Logic, investors can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing deeper insights for informed decision-making.
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