Integrated Device Has More To Offer, But Transitions Can Be Tough

It stands to reason that after the strong run in the SOX (up over 40% in the past year and over 80% in the last two years), lingering undervaluation in individual semiconductor stocks is going to come with a “but” attached. In the case of Integrated Device Technology (NASDAQ:IDTI), the company is looking at some decidedly mixed market outlooks, with uncertainty in attach rates for wireless charging, weakness in wireless infrastructure spending, potential for disappointment in server unit shipments, and ambitious targets for the auto and sensor businesses.

I like the collection of technologies that Integrated Device has assembled in-house, and I believe the company can generate double-digit FCF growth from here. Although the shares do not look undervalued on a DCF basis, the shares do still seem to offer some upside on an EV/revenue business and could attract M&A interest. Integrated Devices looks buyable today (although I think MaxLinear (NYSE:MXL) may be more interesting), and it would definitely be a name to reconsider on a pullback into the low $20s.

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Integrated Device Has More To Offer, But Transitions Can Be Tough