Aggressively Accumulate Integrated Silicon Solution (NASDAQ:ISSI) Shares Says Needham

Even though Integrated Silicon Solution (NASDAQ:ISSI) reported a strong quarter and gave solid guidance, Needham believes they're even better than that, and recommends buying up shares of the company aggressively.

Needham says, "We are raising our price target on ISSI to $15 and introducing our FY12 Non-GAAP estimates. While ISSI indeed reported a solid quarter and guidance, we believe the long term fundamentals of the company are poised to improve materially. The inventory correction in the commodity DRAM market is largely behind the company and we believe the backlog across ISSI’s key markets (i.e. auto/telecom/networking) is strengthening. Moreover, the company’s acquisition of Si En, a supplier of higher performance mixed signal circuits for the consumer market, helps diversify the company’s revenues and improves its overall blended gross margins. We believe ISSI’s gross margin profile is an upward trajectory with the acquisition of Si En and the divestiture of lower margin Giantec. With the shares trading at less than 5x our FY12 Non-GAAP EPS, excluding the cash, we recommend investors aggressively accumulate shares at current levels.

"We are increasing our FY11 Non-GAAP EPS to $278.5MM/$1.25 (vs. $267.8MM/$1.13). We are also introducing our FY12 Non-GAAP EPS ests of $320.0MM/$1.60."

Needham & Company reiterates a "Buy" rating on Integrated Silicon Solution (ISSI), which closed Thursday at $10.94, gaining $1.01, or 10.17 percent. Needham raised their price target on ISSI from $12 to $15.

Integrated Silicon Solution (NASDAQ:ISSI) Revenue Expected to Fall 10 Percent

The negative preannouncement by Integrated Silicon Solution (NASDAQ:ISSI) hasn't kept Auriga from maintaining their "Buy" rating on the company, even with revenue expected to drop by 10 percent quarter-over-quarter.

Auriga says, "We maintain our rating on ISSI and increase our price target despite its negative FQ111 (December) preannouncement on Friday before market open. Revenue is now expected to be down -10% q/q (-5% below prior guidance) as demand weakness in specialty DRAM products combines with an ongoing inventory correction. Our FY11 estimates were already well below consensus - we have long argued that the Street is too optimistic on the depth and duration of the ongoing cyclical revenue decline. However, our model suggests that ISSI will continue to generate cash across the cycle - with the stock trading below our year-end FY12 book value estimate, we're not sure that reduced EPS estimates will have much of an impact."

Auriga maintains a "Buy" rating on Integrated Silicon Solution, which closed Monday at $8.77, up $0.22, or 2.57 percent. They raised their price target on them from $9 to $10.