Shares of Irvine-based chipmaker Microsemi Corp., which makes chips for military, aerospace and industrial uses, rose after an analyst upgraded the stock Monday.
Investors sent shares up nearly 5% Monday on a recent market value of roughly $1 billion.
Thomas Weisel Partners LLC analyst Tore Svanberg bumped up Microsemi’s rating to “overweight” from “market weight” and increased his price target to $17 per share from $15 per share.
Microsemi was trading at around $14 per share on Monday.
Svanberg said Microsemi’s stock should get a boost as the markets for some of its chips begin to rebound.
“We believe the company is tracking above the midpoint of September-quarter guidance, driven by the company’s high-performance analog business, as demand surges for liquid crystal display TVs and the power-over-Ethernet market rebounds,” he said in a research note.
He also liked that Microsemi last week settled a long-running antitrust lawsuit with the government.
“With different sources of overhang now largely behind the company, we now believe Microsemi stock will again trade in-line with peers and, over time, potentially above,” Svanberg said.
Last week, Microsemi sold some assets from its $25 million buy of Costa Mesa’s Semicoa Semiconductors Inc. a year ago to settle a suit brought by the Justice Department.
Semicoa was bought by Los Angeles-based private equity firm Vance Street Capital LLC. Terms of the deal weren’t disclosed.
Semicoa is set to continue operations at its Costa Mesa headquarters. It’s still unclear how many workers it will have.
Calls to the company weren’t immediately returned.
Both Microsemi and Semicoa make what’s known by industry insiders as “high reliability” chips, which go into devices that are costly if they fail, such as satellites.
Microsemi said the deal will not have an impact on the company’s financial results.
It’s set to provide more details when it releases results for the current quarter, likely in October.
The Justice Department filed the suit in December, claiming that the Semicoa deal creates a monopoly on certain types of chips that amplify electrical signals.
The government argued that having a monopoly on those chips allowed Microsemi to unfairly raise prices on its customers, who couldn’t go buy the chips from other suppliers.
Revenue generated by the products covered in the complaint totaled about $8 million,a small piece of Microsemi’s roughly $500 million in yearly sales.
At the time, the government said it was seeking to undo the deal and sell off the assets that Microsemi bought from Semicoa, which included millions of dollars of factory equipment at its 47,000-square-foot Costa Mesa chip plant.
Over the past few months, Microsemi moved some of the equipment from
Semicoa’s factory to its manufacturing sites in Ireland.
Microsemi laid off about half of Semicoa’s workers at the time. It’s not clear if the factory is still operating here.
