Anadigics, Inc. (ANAD) recently downgraded its guidance and now expects revenue around $62-$65 million, down from the previous estimate of $75-$81 million. Pro-forma EPS should now be between -$0.01 and $0.01. As a result, ANAD will also defer additional investments in its China fab. We are appalled by the significant outlook revision given that the company held their conference call only a few weeks ago.
Earlier, the company reported second-quarter results, which topped our estimates, driven by stronger than anticipated growth in broadband. Revenue of $80.5 million, up 8% quarter-over-quarter and 49% year-over-year, exceeded our estimate of $78 million. Pro-forma EPS of $0.18 beat our estimate by two cents. However, wireless segment was down 3.7% sequentially and the management indicated that the softness is going to continue in the third quarter due to softness in the market and some inventory correction at customers. We reiterate our Hold rating.
The stock is currently trading at 9.6x our current FY2008 EPS estimate of $0.58. Given the current negative guidance, coupled with an uncertain macro environment, we have adjusted our fiscal 2008 estimates and sharply reduced target price to $4. Our current six-month target price is 11.1x our FY2008 EPS estimate and 12.1x our preliminary FY2009 EPS estimate.
Read the full analyst report on ANAD
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