Xilinx Inc. (NASDAQ: XLNX) is hot with investors and the analyst community. The rating of the semiconductor manufacturer was recently upgraded by several research firms with all of them jacking up their 52-week price target for its stock on the belief that the company is well positioned for near-term growth after notching a technology edge against its closest rivals.
The field-programmable gate array (FPGA) vendor’s stock was raised to “buy” from “hold” by analysts at Goldman Sachs Group who also jacked up their price target for the company to $50, helping to boost its performance on Wall Street. On Thursday, Xilinx’s share price strengthened to a high of $46.70, moving close to its 52-week high of $48.12 and boosting its market value to about $12.5 billion.
Several other investment firms have similarly raised their rating and price targets for Xilinx in recent weeks. Research companies that have positively commented on Xilinx’s performance and upgraded its stock price in recent weeks include Drexel Hamilton, Nomura Securities and JMP Securities. The 52-week price targets set for the company by the analysts range from $50 to $55.
Xilinx appears to have won many analysts over following recent presentations to investors by senior executives of the company. In December, the company participated in several investment conferences, including presentations at the Credit Suisse Technology and the BMO Technology, Media & Entertainment events held in December. Moshe Gavrielov, president & CEO of Xilinx answered questions posed by analysts at the BMO event and outlined some of the opportunities the company sees ahead in its market segment.
Gavrielov noted that the company had begun rolling out products based on its 20-nanometer (nm) technology through its partnership with Taiwan Semiconductor Manufacturing Co. Ltd. Xilinx, he noted, was first to market with 20-nm and 28-nm products and has, as a result, opened up a strong competitive lead on the technology front with its closest rivals.
“We actually have over four months advantage over any competition,” Gavrielov said in his presentation December 10 at the BMO 2013 Technology, Media & Entertainment Conference. “Our product offering at 20-nm is very broad. It encompasses the mid-range and the high end and has much higher performance, lower power and better software. As part of that we announced the high-end product, which is the 440, which enables our customers to use 4.4 million logic cells that gives us a factor of four advantage over the competition.”
Xilinx and Altera Inc., its main and closest competitor, are locked in a fierce rivalry for market share in the programmable semiconductor market with some of the field battles occurring in the innovation, production and time-to-shipment of next-generation products. For years, the two companies have jostled for market position and their financial results often reflect this competition.
Altera’s fiscal sales have in recent years fallen behind Xilinx’s although the gaps have ebbed and flowed based on market demand and technology advantages. In 2012, Altera reported revenue of $1.8 billion and analysts on average project it will post sales of $1.7 billion for 2013, rising in 2014 to $1.9 billion. By contrast, Xilinx had revenue of $2.17 billion for the fiscal year ended March 30, 2013 with the consensus estimate for fiscal 2014 in the range of $2.4 billion.