Irvine-based Microsemi Corp.’s recent addition of new chip technologies for the Department of Defense could help it to double sales in the next few years, according to one Wall Street analyst.
Microsemi, the third biggest chipmaker here by local workers, sees roughly $500 million in yearly sales.
It makes chips that go into a variety of devices, including computers, TVs and satellites, for military, aerospace and industrial uses.
Through a series of acquisitions in the past year, it’s entered into new markets selling chips that go into airport X-ray body scanners, prevent tampering in weapons and run global positioning systems.
“Discussing Microsemi’s potential business several or more years out, management suggested that $1 billion in annual revenues and 60% gross operating margin targets are possible through organic and inorganic growth,” FBR Capital Markets & Co. analyst Craig Berger said in a research note on Thursday. “While much work remains to be done between now and then, we do believe scaling anti-tamper, GPS and body scanner technologies across its roadmap will be key to closing the gap.”
After a meeting with Microsemi Chief Executive Jim Peterson this week, Berger boosted his profit outlook for 2011 and lifted his price target on the stock.
He now expects Microsemi to see yearly profits of $133 million to $137 million for the 12 months through September 2011.
Analysts, on average, expect the company to see 2011 profits of $133 million on sales of $631 million.
Berger boosted his price target to $26 a share, from a previous target of $25 a share.
Microsemi was at about $17 a share in early afternoon New York trading Thursday on a recent market value of $1.4 billion.
Berger also reiterated Microsemi’s “outperform” rating and its “Top Pick” status for the year.
“We believe it is an attractive opportunity given shares reflect a ‘show me’ discount that could narrow over time,” he said. “The firm is pursuing various key earnings growth opportunities and its high-reliability franchise is very attractive with limited competition and high barriers to entry.”
