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SG Cowen Ups Integrated Device to 'Strong Buy'


SG Cowen upgraded Integrated Device Technologies (IDTI) to strong buy.

Analyst Jack Romaine says restructuring is expected to cut the fiscal 2004 (March) spending by $30 million. He expects a cash burn of $5 million to $10 million in the fourth quarter, and positive cash flow from operations through fiscal 2004. He says the $5.50 net cash per share and the 70% to 75% incremental gross margins creates a favorable risk/reward with the stock trading at $7.55 at the close of trading on Thursday.

Romaine thinks the company's weak business model poses a risk, as illustrated by its low pretax return on assets. He also is concerned with the company's dependence on a cyclical recovery. He widened his 44-cent fiscal 2003 loss estimate to a 46-cent loss, and narrowed the 39-cent fiscal 2004 loss estimate to a 12-cent loss. He also raised the 19 cents fiscal 2005 earnings per share estimate to 36 cents earnings per share.


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