Fairchild Semiconductor Intl Inc (FCS) Could Be Facing Leaner Times

October 15, 2014

Christopher Rolland, Analyst with FBR Capital Markets, says tougher times may be ahead for Fairchild Semiconductor Intl Inc (FCS). He says the company faired well in 2010 and 2011 because it is levered to mobile handsets, the iPhone in particular. As a result, he says the company wasn’t forced to reduce headcount or trim opex, like many so-called supercyclicals had to do during that time period.

“They didn’t have to make those decisions because they have the luxury of the handset tailwind behind it, the smartphone tailwind behind them,” Rolland says. “However, over this cycle, those decisions not to cut heads, not to become lean and mean when the others did have hurt them in this cycle. So we do believe that they are taking their medicine now.”


Rolland says he believes Fairchild is beginning to trade closer to what he thinks is fair value. He says he’d be enthusiastic if the stock was around $12 or $13.

“About $10.50 or $11 is book value for this company, which we think is pretty generally a floor for these types of supercyclicals. So that would sum up our thinking, I would say, on Fairchild. Again, that would be a name that if we had a cyclical reset here that we would like to scoop off the bottom,” Rolland says.