Maxim Integrated Shares Drop As Renesas Denies Merger Interest
Maxim Integrated Products (MXIM) stock fell on Tuesday after Japan’s Renesas Electronics denied a news report that it is interested in buying the U.S. chipmaker.
Renesas put out a short statement late Monday that poured cold water on the takeover talk.
“Certain media reports were published today that Renesas is in talks for a possible acquisition,” Renesas said. “They were not based on a Renesas’ announcement and the company denies such speculations in the reports.”
While the Renesas deal is unlikely to happen, Maxim would still make an attractive takeover target as consolidation continues in the chip sector, B. Riley FBR analyst Craig Ellis said in a report to clients Tuesday. He rates Maxim as neutral with a price target of 54.
“We remain ardent believers consolidation will likely persist, as seemingly evidenced by recent reports Microsemi (MSCC) has hired strategic advisers,” Ellis said.
IBD’S TAKE: Maxim Integrated Products has an IBD Composite Rating of 91 out of a best-possible 99. But it ranks No. 3 in IBD’s Electronics-Semiconductor Fabless industry group. To see which stocks lead the group, visit the IBD Stock Checkup.
Maxim could be a good strategic fit for European-traded Infineon Technologies or Microchip Technology (MCHP), he said.
But Maxim has been speculated as a takeover candidate before and those deals didn’t materialize. In late 2015, Analog Devices (ADI) and Texas Instruments (TXN) reportedly looked at acquiring Maxim, but eventually passed, Ellis said.
Integrated Device Technology Falls On In-Line Guide
Another chipmaker with shares under pressure Tuesday is Integrated Device Technology (IDTI).
Late Monday, San Jose, Calif.-based IDT reported December-quarter results that beat expectations, but gave in-line guidance for the current quarter.
IDT shares were down 6.9%, near 31.20, in morning trading Tuesday.
IDT earned an adjusted 42 cents a share, up 20% year over year, on sales of $217 million, up 23%, in its fiscal third quarter ended Dec. 31. Analysts were modeling for 41 cents and $215 million.
“Strength in the quarter was driven primarily by increasing demand for products in our high-performance compute and automotive/industrial end markets,” IDT Chief Executive Greg Waters said in a news release. “We expect product cycles in our consumer end market to kick in during our fiscal fourth quarter, driving total company growth beyond normal seasonality.”
For the current quarter, IDT guided to adjusted earnings per share of 44 cents on sales of $222 million, matching views.
IDT stock received at least three price-target hikes from Wall Street analysts on the earnings report.
Needham analyst Quinn Bolton reiterated his buy rating on IDT and upped his price target to 38 from 36.
“The ramp of Intel‘s (INTC) Purley server platform had a strong effect on demand for (IDT) memory interface components and is expected to remain a growth driver throughout calendar 2018,” Bolton said. “Wireless power continues to be an area of strength as well with IDT seeing increased adoption from a variety of smartphone (makers) and add-on wireless power accessory makers.”