National Semiconductor's Revenues Underperform, FBR Capital Mantains Outperform Rating

FBR Capital Markets has published a research report on National Semiconductor (NYSE: NSM) after the company reported continued revenue underperformance during its 2Q.

In the report, FBR Capital writes "National Semi reported largely in-line financial results and guidance yesterday after the market close. Frankly, we had expected a bit more calendar 2Q11 EPS upside than what National guided for, with our new estimate of $0.29 slightly worse than our prior $0.31, but better than the Street's $0.27. That said, management is essentially calling a bottom in its business, guiding for +5%–8% QOQ revenue growth in 2Q11, and likely growing more in 2H11 as its growing design funnel drives revenues a bit higher. We note National averaged $391M of quarterly revenues in calendar 2010, and we see no reason why National's revenues cannot return to that run-rate. Importantly, management does see a growing design-win pipeline, is releasing more highly integrated handset power-management chips to battle Maxim, and is prepared to use slightly lower prices to retain or win new business—a slight drag on future gross margins, but with rising utilizations a likely offset. Stepping back, we think National's revenues can improve over the next year, possibly aided by some slight share recapture."

FBR Capital Markets maintains its Outperform rating and $20 price target.

National Semiconductor closed yesterday at $14.16.