Cirrus Logic Stock Surges 89% in a Year: Will the Rally Last?

Core Viewpoint - Cirrus Logic, Inc. (CRUS) has experienced significant stock growth, outperforming the S&P 500 and its sub-industry, driven by strong financial performance and product innovation [1][2]. Financial Performance - CRUS stock has gained 89.3% over the past year, compared to 23.7% for the S&P 500 and 58.5% for its sub-industry [1]. - The company reported total revenues of $374 million in the last quarter, exceeding the Zacks Consensus Estimate by 17.7% and showing an 18% year-over-year increase [2]. - Earnings have consistently surpassed estimates, with an average surprise of 56.6% over the last four quarters [2]. Product Development and Market Expansion - CRUS is ramping up production of its custom boosted amplifier and 22-nanometer smart codec in anticipation of upcoming smartphone launches [3]. - The company launched a new lineup of digital-to-analog converters (DACs) and an ultra-high-performance audio CODEC in June 2024, targeting recording artists and audiophiles [4][5]. - The High-Performance Mixed-Signal and Audio Serviceable Available Market (SAM) is expected to exceed $5.7 billion and $3.3 billion by 2028, respectively [5]. Future Outlook - For the second quarter of fiscal 2025, CRUS expects revenues between $490 million and $550 million, with a Zacks Consensus Estimate of $520 million, reflecting an 8.1% year-over-year increase [6]. - Analysts have raised their estimates for the current quarter and year by 17.7% and 8.6%, respectively, in the past 60 days [6]. Balance Sheet Strength - As of June 29, 2024, CRUS had cash and cash equivalents of $491.4 million and no long-term debt, allowing for strategic acquisitions and shareholder distributions [7]. - The company repurchased 361,218 shares worth $41 million in the last quarter, with $274.1 million remaining under its share repurchase authorization [7]. Challenges - Increasing expenses, particularly in variable compensation and product development, may impact margin performance [8]. - The company faces competition and volatile foreign exchange movements amid uncertain macroeconomic conditions [8].