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Zacks Analyst Interview Highlights: Xilinx, Altera and Lattice Semiconductor

Business Wire, March 6, 2008

CHICAGO -- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Claudio Freitas, who discusses Xilinx (Nasdaq: XLNX), Altera (Nasdaq: ALTR) and Lattice Semiconductor (Nasdaq: LSCC).

A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Have you issued any Buy reports recently? If so, on which companies?

Well, recently I reiterated my Buy recommendation on shares of semiconductor company Xilinx (Nasdaq: XLNX), which is a leading provider of programmable logic devices. The major focus of the effort is the design of new ICs [integrated chips], the creation of software design tools, and cost reduction and performance improvements in products. An important ingredient to success is the company's ability to protect its intellectual property.

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Xilinx's New Product momentum was the strongest in seven quarters, highlighting the company's improved execution and lead in new products versus the competition, and which should enable the company to regain market share in calendar 2008. We have adjusted our Q4 and FY2008/2009 estimates, and continue to rate Xilinx a Buy with a target price of $31. (The stock is currently trading around $22.50 per share.)

Isn't this company in a heavily competitive market?

The company is in an intensely competitive industry with players of all sizes and locations. Competitors include other PLD makers such as Altera (Nasdaq: ALTR) and Lattice Semiconductor (Nasdaq: LSCC), as well as numerous application specific integrated circuit (ASIC) manufacturers. However, given the trend of PLDs replacing ASICs in digital systems, the long-term growth prospects for the firm appear to be bright.

We think the current share price for Xilinx is at an attractive entry point for long-term investors. We believe the company's growth will reaccelerate given the competitive advantages of the company's 90-nm and 65-nm technologies as well as the end to an inventory correction in the industry. Our $31 target is derived by applying a target P/E multiple of 24.2x to our fiscal year 2008 EPS estimate and 20.9x our fiscal year 2009 EPS estimate. We consider our choice of target multiple to be conservative and underscores the attractiveness of the company's valuation.

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The performance of the Zacks Rank portfolios for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from January 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month. The portfolios created monthly from 1988 through September 2006 exclude ADRs and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. These performance numbers have been audited from 1995 through 2003 by Virchow, Krause & Company, LLP.

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Business Services Industry

Zacks Analyst Interview Highlights: Xilinx, Altera and Lattice Semiconductor

Business Wire, March 6, 2008

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