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Bear of the Day: Cirrus Logic (CRUS)

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Founded in 1984 and headquartered in Austin, Texas, Cirrus Logic (CRUS - Free Report) is a fabless semiconductor supplier, which develops, manufactures and markets analog, mixed-signal, and audio DSP integrated circuits (ICs).

The company’s product lines include portable audio products and non-portable audio and other products.

Their audio chips are used in the leading smartphone brands, tablets, digital headsets, wearables and many emerging smart home applications.

Apple is CRUS’s largest customer, accounting for ~80% of the revenue though the company develops solutions for many industry leading global brands.  

Weak Earnings

The company reported weak results for third-quarter fiscal 2018. Non-GAAP earnings of $1.59 per share missed the Zacks Consensus Estimate of $1.77 and were also down 15% year over year.

Total revenues were down about 7.7% year over year and missed our estimate. They were also short of the guided range well.

“Unanticipated weakness in smartphone demand that materialized in late December drove our Q3 results below expectations and further impacted our Q4 guidance,” said the CEO.

Estimates Plunging

After weak results, analysts have cut their estimates for the company. Zacks Consensus Estimate for the current year and next fiscal year have fallen to $4.36 per share and $3.95 per share respectively, down from $4.82 and $4.87, before the results. Falling estimates sent the stock to a Zacks Rank #5 (Strong Sell).

Cirrus Logic, Inc. Price, Consensus and EPS Surprise

Cirrus Logic, Inc. Price, Consensus and EPS Surprise | Cirrus Logic, Inc. Quote

The Bottom Line

Shares of CRUS are down almost 19% this year but a rebound doesn’t appear likely any time soon. Further, the company is highly dependent on a single customer, which makes the stock riskier.

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