Estimates Up for Xilinx

Earnings estimates for Xilinx, Inc. ( XLNX - Analyst Report ) have gone up lately after the company reported better-than-expected results for the fourth quarter of 2012.

Xilinx expects strong growth from 28-nanometer and 40-nanometer product families in 2012. The growth in six of the secondary end-market segments that the company serves convinces the management of a broad-based recovery.

Xilinx posted a net income of $134.1 million or 49 cents per diluted share in the fourth quarter of fiscal 2012, easily beating the Zacks Consensus Estimate of 41 cents.

Consequently, nineteen out of the twenty-one analysts covering the stock upped their estimates for fiscal 2013 while two moved in the opposite direction.

The current Zacks Consensus Estimate for Xilinx is $2.01, up by 5 cents in the last thirty days. Xilinx has been consistently beating our estimates. On an average, results have exceeded expectations by 11.34% in the last four quarters.

Management stated that 28-nanometer product family rollout continues at a rapid pace and management is confident that this will be the most successful node in the company’s history. We believe the inventory correction in the supply chain is almost complete and the company should return to growth by the second quarter of calendar 2012.

This is in sharp contrast to key competitor, Altera Corporation ( ALTR - Analyst Report ) , where estimates have declined in the last few days driven by weak results.

Xilinx is uniquely positioned to capitalize on incremental growth opportunities offered by its leadership in 28nm products and innovative platform-based architectures. The ramp-up in 40-nanometer and 45-nanometer products will open a host of new markets, and replacement of ASICs will take place in a more aggressive way.

As of now, we await further clarity and maintain our Neutral recommendation on Xilinx. Our recommendation is supported by Zacks #3 Rank, which translates into a short-term rating of Hold.