Linear Tech in a Straight Line

Wed. September 03, 2008; Posted: 07:10 AM

Sep 03, 2008 (Zacks Investment Research via COMTEX) -- LLTC | Quote | Chart | News | PowerRating -- Linear Technology Corporation (LLTC) is a leading OEM of analog and mixed signal semiconductors. June quarter revenue was in-line with consensus expectations, while the EPS exceeded. Forward guidance is for a 0-2% revenue growth in the next quarter. The shares are currently trading at a 15.7x multiple of our 2009 earnings estimate (P/E). Linear Technology has an attractive business model that features some of the most favorable margins within the technology sector. The company grew sales 30% coming off the last down-cycle in 2005, and 4% in fiscal year 2006. Growth tapered off in fiscal 2007, as management continued to pursue only those business lines that afforded gross margins at the level historically enjoyed by the company. As a result, cash flow has been very consistent. Linear has around $967 million in cash and short-term investments ($4.36 a share). The management continues to pay a dividend, and recently raised the amount to $0.21 per share. Historically, the company has done extremely well during economic downturns; therefore the stock should continue to do well as the cycle dips. We view LLTC as one of the lowest risk stocks in the technology sector. We are reiterating our Hold rating and target price of $35.00 (16.7x P/E). The company has a stockholders' deficit. Consequently, the TTM ROE [trailing 12-month return on equity] is negative (-81.0%). Sejuti Banerjea contributed to the report. Read the full analyst report on LLTC

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For full details on Linear Technology Corp (LLTC) click here. Linear Technology Corp (LLTC) has Short Term PowerRatings of 5. Details on Linear Technology Corp (LLTC) Short Term PowerRatings is available at This Link.

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