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On Oct 24, Zacks Investment Research upgraded Supertex, Inc. to a Zacks #1 (Strong Buy).

Why the Upgrade?

Supertex has been witnessing rising earnings estimates on the back of strong fiscal second-quarter 2014 results. This well-known semiconductor manufacturer delivered positive earnings surprise in all the last 4 quarters with stellar average earnings beat of 245.7%.   

Supertex reported fiscal second-quarter 2014 (ended Sep 30) results on Oct 22. Earnings per share came in at 24 cents, surpassing the Zacks Consensus Estimate by 41.18% and the year-ago figure by 33.3%.

Earnings were primarily aided by top-line growth of 11.5% year over year and strong margins. Supertex reported robust sales in all four of its growth markets -Medical Ultrasound, LED Lighting and Backlighting, Printer/EL, and Industrial. Moreover, the company’s gross margins improved 340 basis points sequentially to 57% during the reported quarter.

Notably, some of its recently launched products received positive response from the market and are likely to boost sales in the upcoming quarters.

The Zacks Consensus Estimate for fiscal 2014 increased to 78 cents from 73 cents per share as one of the estimates was revised higher over the last one week. Additionally, for 2015, analysts raised the estimates over the same time frame, thereby lifting the Zacks Consensus Estimate to 78 cents per share from 76 cents.

Other Stocks to Consider

The following business service firms are performing well and also have favorable Zacks Rank.

1)      Monolithic Power Systems Inc. (MPWR - Snapshot Report), which has a Zacks #1 Rank (Strong Buy)

2)      NXP Semiconductors NV (NXPI - Snapshot Report), which holds a Zacks     #1Rank (Strong Buy)

        3)     Semiconductor Manufacturing International Corp.
               (SMI - Snapshot Report) having a Zacks #1 Rank (Strong Buy)

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