FBR Capital’s Craig Berger this morning reiterates an Outperform rating on shares of Fairchild Semiconductor (FCS) and an $18 price target, writing that the company will get a boost from the cyclical recovery in semiconductors, and that Apple (AAPL) is becoming a more and more important part of the company’s total revenue stream.
Revenue this quarter is “tracking near the midpoint of guidance of $340M to $370M,” writes Berger, based on his checks. If true, that would be in line with the consensus $355.9 million estimate.
“In speaking with a domestic distributor we finally were told of the beginnings of some expanded lead times in power management chips, a plus,” he writes.
Berger takes a “deep dive” into how Fairchild may be serving Apple in the company’s products, concluding that Apple could make up $109 million of revenue for Fairchild this year, or roughly 7% of the projected $1.48 billion in revenue for Fairchild this year.
Investigating Fairchild’s relationship with Apple is difficult given that Fairchild management will not comment on this relationship at all. Our independent assessment suggests that Fairchild Semi has been doing more and more business with Apple in recent years as low-cost discrete FETs and higher- value analog power management chips are designed into the iPhone, the iPad, and the related charging devices. We think Fairchild sells discrete FETs and a power management IC (bundled) into the iPhone 4S and the new iPad, with roughly $1.00 of total content, and with Fairchild shipping into roughly 40%�60% of these sockets as Apple multi-sources these components. We also think Fairchild has roughly $0.20 of analog IC content in each iPhone, iPad, and Macbook charging device, with 100% socket penetration here.
Apple could become a 10% customer in 2012, he writes, “another positive as Fairchild is increasingly viewed as a smartphone play.”
Fairchild shares are up 36 cents, or 2.5%, at $14.92.
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