Sigmatel Inc. (SGTL)

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July 6, 2007, 10:20 am
SigmaTel: Jefferies Ups Rev Ests On Strong Shipments To MP3 Market
Posted by Eric Savitz

Sigmatel (SGTL) shares are sharply higher today after Jefferies & Co. analyst Adam Benjamin raised his revenue estimates for the chip maker for both the second and third quarters, citing better than expected demand from the MP3 player market.

Benjamin says the company is likely to report second quarter revenue at or above the high-end of previous guidance of $24 million to $28 million. He raised his estimate to $28.4 million, from $26.3 million. “Our checks suggest the better than expected revenue was primarily driven by a return to ordering by its MP3 customers after a seasonally soft Q1 during which SigmaTel saw unit sales decline in excess of 40% [sequentially],” he writes. Benjamin adds that his checks find that “sales into both the high and low-end markets likely experienced stronger seasonal unit growth than we had expected, as customers restocked inventory levels after the seasonally weak Q1.”

Benjamin says the company likely benefited from increasing business from SanDisk (SNDK), and that its two emerging product segments, printers and TV audio, “likely tracked inline to slightly better” than expectations.

Benjamin also said that third quarter guidance is likely to be ahead of the current consensus. He increased his Q3 revenue estimate to $38 million from $36 million.

Benjamin says the business upturn presents a “near-term trading opportunity,” but that he remains Neutral on the stock “due to longer-term liquidity concerns.”

Sigmatel shares today have jumped 31 cents, or 11%, to $3.02.
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