Magnachip Semiconductor LLC (MX)

[eastunder]

MagnaChip Gains 15% on Earnings Beat, Upgrade

By Ben Levisohn

There’s nothing like a resounding earnings beat to convince bearish investors that the future looks bright. And that’s exactly what MagnaChip (MX) did.

Reuters
The South Korean chip maker reported earnings of 71 cents a share, above forecasts of 60 cents, while revenue ticked up 6.2% from a year ago to $$215.3 million, above estimates for $214.96 million. MagnaChip also approved a $100 million stock-buyback program.

The news was good enough for Susquehanna to upgrade the stock to Positive from Neutral, while Needham’s Rajvindra Gill increased his earnings estimate for the stock. Gill explains why he’s a fan of the stock:


MX’s diverse, hybrid business model continues to show its true value in our view as MX is able to offset a slowdown at two of its top handset customers through the sheer diversity of its customer base and product breadth. With the announcement of $100MM share buyback, lower OPEX profile and continued top line growth, we believe MX is on track to earn well over $3 next year, making the stock look undervalued at current levels…Our $28 PT is based on a conservative forward P/E 8.8x on 2014 earnings.

Shares of MagnaChip have gained 15% to $19.97 today–more than erasing its 9.5% drop during the past week. The iShares MSCI South Korea ETF (EWY) has fallen 0.8% to $55.64.