Shares of Irvine-based Microsemi Corp., a maker of chips for military, aerospace and consumer uses, jumped on Thursday after an analyst said its March quarter sales could come in above its outlook.
The stock rose nearly 3% in early afternoon New York trading on a recent market value of $1.8 billion.
FBR Capital Markets Corp. analyst Craig Berger said the company’s business is “tracking robustly” and that “the firm is likely to post revenues at or above the high end of guidance.”
Microsemi said it expects sales of $203 million to $208 million. Analysts, on average, are looking for $206 million in sales.
Berger said the Street’s outlook “is possibly looking conservative by a couple of points, with some gross margin and earnings per share upside likely.”
Wall Street is expecting Microsemi to see adjusted profits of $39 million, up roughly 77% from a year ago.
Microsemi’s chips go into a wide variety of devices, including satellites, laptops, sensors, weapons guidance systems and X-ray security scanners.
The company’s goal is to be the world’s top supplier of what’s known as high-reliability chips, which are used in gear that’s costly if it goes down.
“While concerns remain about defense spending cuts, we think that long-term electronics content growth remains intact and electronic weapons will increasingly be used instead of human soldiers,” Berger said in a research note. “Microsemi continues to execute its strategic plans of scaling up its defense and aerospace semiconductor product offering.”
Berger is bullish on Microsemi and sees shares reaching $30 this year.
“If Microsemi’s management continues this revenue performance over the next year, we think earnings and the stock’s multiple can increase, driving shares towards $30,” he said.
The stock was trading at about $21 per share on Thursday.
