A Few Reasons to Invest in This Technology Stock for the Long Run

Author's Avatar
Feb 27, 2015

Integrated Device Technology (IDTI, Financial) had a strong finish to the quarter delivering solid improvement across all its key financials. The company is seeing good traction for its products in the market, and the success of these products is giving strength to its growth momentum. The company is expected to perform very well in the coming quarters. It is seeing key opportunities with the technological advancement and is seeing favorable ASP trends and demand ramp up in the 4G infrastructure. It has an impressive product pipeline which also seems well positioned to bring in new products in the market in the future. Let us have a detailed insight of the overall business of the company.

Quarterly performance

Integrated Device Technology’s quarterly revenue came in at $151.2 million which is a solid 10% growth as compared to last year’s same quarter. Its smooth operations also led it to see 26% improvement in the operating margin. Integrated Device Technology was also impressive on the earnings front as well. The company posted its quarterly EPS of $0.25.

There are lot of favorable opportunities that the company is seeing. With the 4G rollout across the globe, the company is seeing strength in its Serial RapidIO business. The growth in this business has also ramped up the demand for RF products. The company expects this demand to gain significant traction in the coming quarters.

Focus on products

A relentless focus of the company in providing best quality services is taking shape, and it is working well in this area of interest. To succeed more in this area, Integrated Device Technology is extending its success of 4G base stations to new emerging applications such as C-RAN. The company has great expectations for this and it expects them to be one of its key contributors in the future. Moving on, data center market remains one of the strongest growth areas for Integrated Device Technology.

It is seeing growing market demand for advanced memory technology and with the growing market share, the company is expecting better investor engagement with its new product content such as DDR4, LR-DIMM. With these products gaining good response in the market, Integrated Device Technology remains confident for its strong performance in the upcoming quarters.

Besides this company is continuing the same strategies that it undertook in the past as well. Under this, Integrated Device Technology will be focusing mainly on the high end programmable differentiated products to deliver multi-standard support. The least focus on lower end products will improve its margins helping it to gain further market share in the future.

The company is pleased with its potential in the target markets, and, on the back of it, it is expecting solid 3% growth in sales from its communication market. From the computing market it is expecting the sales to increase by 6% which is an impressive increase.

Conclusion

Moving on to the fundamentals, with a trailing P/E of 59.04, the stock looks expensive. The earnings are showing steady growth with a forward P/E of 19.30. The impressive profit margin of 10.25% can be another attraction of the investors in the stock. Even the analysts expects it to become a strong long term holding as its earnings are growing at a CAGR of 38.60% which is far better than the industry average of just 19.35%. All these facts and statistics are favorable and makes Integrated Device Technology a wise pick as of now.