Not only is the Company trading near its 52-week range but the stock reportedly has a $12 price target by Jeffries. If you've been following Atmel stock like i have for the past 10+ years, You will realize that the Company's stock seems to have very bullish momentum. The guy at Raymond seem to agree and say the following:
"After two days of meetings with Atmel’s management last week we came away with significantly increased conviction on the Atmel story,” he writes in a research note. “We are upgrading ATML … based on increasing secular momentum in the broad-based 8- bit and 32-bit [micro-controller] markets and also the rapid market share gains in next generation multi-touch screen applications in smartphones and tablets.”
They have put a $12 price target on the which I think is very achievable. Now I know that a $7.80 stock is not what one would define as "expensive" but there is a cheaper way to participate in potential upside in the Company. Take a look at the March 2011 7.5 strike upside calls trading at $1.05. Your break even price at expiration is around $9 but I believe that the bullish momentum this stock is experiencing will propel it to much higher level. I would not be surprised if we see the stock move towards $12/share by Jan or Feb of next year before it starts to become attractive to potential buyers. Semi's are a hot commodity right now and underpriced companies like Atmel would be an asset to many players...especially those looking to leverage the boom in touch screen technology which Atmel provides products for.
Interesting pick - what are your thoughts on Micron Technology (MU), which should also benefit from smartphone adoption, no? I don't know much about the industry but the low P/E (<5) relative to the industry raises some questions: is it truly undervalued or is the company exposed to downward pricing/other risks that are reflected in the current price?
ReplyDelete