Thursday’s Top Upgrades (and Downgrades): Yandex NV (YNDX), TriQuint Semiconductor (TQNT)

TriQuint? Or don’t?
Last and least (at least in Wall Street’s estimation), we come to TriQuint Semiconductor, recipient of at least two downgrades this morning, from Needham and Longbow Research, respectively, both of which now consider the stock a hold. Why?

After all, TriQuint just finished reporting earnings for Q4 and full-year 2012, and even Needham admits that “TriQuint delivered 4Q12 results that exceeded guidance and our expectations primarily due to a surge in Defense revenue.” Unfortunately, Needham also notes that “1Q13 revenue guidance was well below our estimate due to platform transitions at major customers and seasonality.” Gross margins are expected to drop as low as 25%, as costs rise and revenues fall. When all’s said and done, Needham sees TriQuint ending 2013 not only free cash flow-negative — as it was last year — but actually cash flow negative. As in, burning cash even before you start counting the money spent on capital investments.

This suggests there’s a strong possibility that TriQuint’s current cash-rich balance sheet could go into the red over the next 12 months, eliminating one of the few reasons to want to own this already unprofitable mobile chip maker.

Result: Down 12% already today, and priced below book value, TriQuint may look like a bargain. It’s not.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Yandex. The Motley Fool owns shares of TriQuint Semiconductor.

The article Thursday’s Top Upgrades (and Downgrades) originally appeared on Fool.com and is written by Rich Smith.

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