Morgan Keegan Cuts Sirenza Microdevices

From Standard & Poor's Equity Research

Morgan Keegan downgraded Sirenza Microdevices (SMDI) to market perform from outperform, noting concern about the company's third quarter performance.

Analyst Harsh Kumar says he's been picking up signs of a slowdown in the wireless base station market. He does not believe Sirenza is at risk of missing second quarter Street expectations of 12 cents earnings per share (EPS) on $35.3 million revenue, but thinks expectations for third quarter EPS of 14 cents on $38.5 million revenue could be the issue. He says that despite the recent pull back, Sirenza Microdevices still commands an ex-cash multiple of 19 times his 48 cents 2006 EPS estimate, toward the high end of the valuation range for semiconductor companies.

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