Goldman Downgrades Applied Micro

Analyst Nathaniel Cohn thinks Applied Micro looks riskier on concerns of higher customer inventories

Goldman Sachs removed Applied Micro (AMCC ) from its recommended list, and now rates the stock market outperform.

Analyst Nathaniel Cohn believes Applied Micro shares are still priced for upward, not downward, revisions. He believes the stock has expectations of solid revenue, with its EPS acceleration already embedded in the price. With Applied Micro's customers' increased levels of inventory; easing supply conditions; and macro concerns that are unlikely to change in the coming quarters, Cohn thinks there will be an entry point with a more compelling risk/reward ratio. He would become more aggressive as the stock's multiple approaches that of some of Applied Micro's peers, i.e., when the shares reach the low $50s range.

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