Citi Sees Xilinx As 'Still The Last Good Takeover Target Standing'

Xilinx, Inc. XLNX reported better-than-anticipated CQ3:16 results on October 19 while issuing robust guidance.

Citi’s Christopher Danely maintains a Neutral rating on the company with a price target of $49.

Robust Results

For CQ3:16, Xilinx reported revenue of $579.2 million, above the guidance and estimate, with seasonality of a 2 percent decline quarter-on-quarter driven by strength in the broadcast, consumer and auto end markets.

Gross margins fell 110 bps quarter-on-quarter to 69.6 percent, missing the guidance and the estimate due to a licensing agreement.

Related Link: Xilinx Sees Q4 Sales Flat Sequentially

The EPS, however, came in at $0.61, beating the consensus and the estimate driven by higher revenue and lower taxes.

Guidance

For CQ4:16, Xilinx guided to revenue of $576.2 million, below the consensus but above the previous estimate.

However, the company guided to a decline in gross margins to 69 percent, in line with the previous estimate.

Takeover Target

“We continue to believe Xilinx is the only high quality semiconductor company left with the attributes of a good takeover target,” Danely mentioned.

The analyst believes that the company could be the next acquisition target for Broadcom Ltd AVGO and could be 10 percent accretive to Broadcom’s EPS in C17.

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