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Should Cirrus Logic (CRUS) Stock Be in Your Portfolio Now?

On Sep 5, Zacks Investment Research upgraded Cirrus Logic Inc. (CRUS) to a Zacks Rank #1 (Strong Buy). The upgrade came on the back of positive estimate revisions over the last 60 days.

Also, Cirrus Logic’s shares are up 15% year to date and have a strong return of 20.0% over the past six months, which makes the company an attractive investment opportunity. Cirrus Logic also delivered positive earnings surprises in the last four quarters with an average beat of 39.6%.

Over the last 60 days, two out of three estimates for Cirrus Logic were revised upward for both the current quarter as well as for fiscal 2015. The Zacks Consensus Estimate for the current quarter increased 18.9% (7 cents) to 44 cents and that for fiscal 2015 increased 12.1% (17 cents) to $1.58.

It is also worth noting that Cirrus Logic delivered strong first-quarter 2015 results. The company’s earnings of 28 cents per share comfortably beat the Zacks Consensus Estimate of 17 cents. Revenues came in at $152.6 million and also surpassed the Zacks Consensus Estimate of $146.0 million. During the quarter, the company witnessed significant expansion in the custom and general market product portfolios, which are expected to boost Cirrus Logic’s prospects.

Most recently, Cirrus Logic completed the acquisition of Wolfson Microelectronics plc for nearly $467.0 million. This acquisition provides Cirrus Logic the platform to build its audio signal processing components. We believe that the acquisition will help Cirrus Logic to serve a broad customer base in the mass storage, industrial and audio markets.

Cirrus Logic generates approximately 80% of its revenue from Apple (AAPL). So there is a good chance that Cirrus Logic will benefit from higher adoption of Apple’s products. Nonetheless, there is always a risk of losing an Apple design, which can impact the overall financial performance of the company.

Moreover, we remain cautious about the company as the current global economic downturn might affect its business potential, going forward. Also, the company faces competition from the likes of Texas Instruments Inc. (TXN) and STMicroelectronics, which remains a headwind.

However, continued investments in the audio segment are expected to positively impact the company in the long run. Additionally, synergies from acquisitions and expansion in the LED market continue to drive growth.

Other Stocks to Consider

Other stocks that are worth considering in the technology sector include Micron Technology (MU), and F5 Networks. Both these stocks sport a Zacks Rank #1.

Read the Full Research Report on TXN
Read the Full Research Report on AAPL
Read the Full Research Report on MU
Read the Full Research Report on CRUS


Zacks Investment Research