Cirrus Logic (CRUS) Stock Climbs on Analyst Upgrade

Cirrus Logic, Inc. (NASDAQ: CRUS)

Cirrus Logic is having a wonderful day in the market today after it was announced that a key analysts has made the decision to upgrade the stock. Today, we’ll talk about the upgrade, how the market reacted to the news, and what we can expect to see from CRUS moving forward. So, let’s get right to it…

Cirrus Logic Is Upgraded

CRUS was the topic of discussion today after a key analyst made the decision to upgrade the stock. The analyst is one of the most trusted in the industry today, Oppenheimer! In the past, Oppenheimer expected for Cirrus Logic to perform in line with the market as suggested by their previous “Market Perform” rating. However, the company has made the decision to upgrade the stock to an “Outperform” rating. Along with the upgrade, Oppenheimer made the decision to increase the stock’s price target to $40 per share, which suggests an upside of 43.06% when compared to the previous closing price of CRUS.

CRUS Recently Reported Earnings

Oppenheimer wasn’t very clear with regard to why they have decided to upgrade the stock. In the statement, all that was said was that the upgrade was a valuation call. With that said, I’d imagine that the valuation call has to do with the recent earnings report we saw from CRUS. Yesterday, the company released its earnings results for the third quarter of fiscal year 2016. Unfortunately, earnings were a bit of a miss. Nonetheless, the company is still on track for 27% year over year growth for the full fiscal year of 2016, even after the lower than anticipated Q3 results. All in all, I would imagine that the fact that the company is on track for such strong growth is why Oppenheimer made the decision to upgrade CRUS.

How The Market Reacted To The News

As investors, we have learned that anytime we see positive news with regard to a publicly traded company, we can expect to see gains. While earnings were a bit of a miss for CRUS, Oppenheimer’s upgrade is incredibly positive news, which is leading to investor excitement. As a result, we’re seeing overwhelmingly positive movement from the stock in today’s trading session. Currently (12:24) CRUS is trading with a price of $34.26 per share after a gain of $1.72 per share or 5.29% so far today.

What We Can Expect From CRUS Moving Forward

Moving forward, I have a mixed opinion of what we can expect to see from CRUS moving forward. While Oppenheimer’s decision to increase the stocks rating from a “Market Perform” to an “Outperform” rating is definitely positive news, I’ve always been an advocate of doing your own research! It’s never a good idea to take an analysts word for it. With that said, I believe that Oppenheimer made the wrong call here. The reality is that the global economy is not doing very well. With the strong USD and the global economy in shambles, CRUS is going to have a hard time selling their products outside of the United States. This in my opinion is the reason for the weaker than expected earnings that were released yesterday. The reality is that directly after missing earnings and in the midst of economic downturns, we can expect for sales to struggle. With that said, I would expect for CRUS to perform with the market, but I’m not expecting for the stock to outperform the market.

What Do You Think?

Where do you think CRUS is headed moving forward? Let us know your opinion in the comments below!