RF Micro Devices Packs a Big Punch (RFMD)

While traders yelled for more Facebook (NASDAQ: FB) shares, a tiny voice in the crowd also garnered the attention of equity traders today. After the close of the market on Tuesday, RF Micro Devices (NASDAQ: RFMD) released second-quarter financial results that easily beat the expectations of Wall Street analysts. The producer of chips used in mobile phones realized revenues of $209.7 million and a profit of $0.03 per share. Forecasts called for $198 million on the top line and $0.01 per share profit.

Bob Bruggeworth, CEO of RF Micro Devices, said the results showed a strong demand for the company’s 3G/4G cellular components. For the coming quarter, Bruggeworth expects to see the growth trend continue. He added, “We expect to outpace the rate of growth of our underlying markets beginning in the December quarter and continuing into calendar 2013.”

RF Micro Devices expects revenues for the third quarter to come in around $245 million and expects to realize a profit of $0.06 per share. Analysts have prognosticated $217.8 million and $0.04 per share

This morning, Northland Securities located in Minneapolis, Minnesota, upgraded shares of RF Micro Devices to “outperform” from “market perform”.

Like shoppers lining up for the day after Thanksgiving sales, equity buyers had cash ready to purchase shares of RF Micro Devices at the opening bell. The stock gapped 52 cents higher from the closing price yesterday to begin the session at $4.45. Traders exchanged shares at a brisk rate in the morning as the volume in the early hours tripled the amount seen on an average day. Shares also hit their intraday high in the wee hours of trading when they hit a price of $4.69. After the morning buying spree, the stock slumped a bit to a daily low of $4.22. Shares of RF Micro Devices traded sideways for the remainder of the day and the stock closed the session with a gain of almost 11% to finish up 43 cents at $4.36. Though volume diminished as the trading day wore on, the 31 million shares exchanging hands made today one of the heaviest volume days in the last 12 months.

Over the last year, the path for RF Micro Devices stock has been literally all down hill. The annual high on the stock was hit almost 12 months ago when shares traded for $7.89. The company began issuing a string of quarterly alarms, warning investors about earnings falling shy of analysts’ expectations. Share prices tumbled 56% until the beginning of June when the stock hit an annual low of $3.45. From the beginning of summer until today, the stock has traded in a range from $3.50 to $4.39. In September, the stock appeared to get a boost when Samsung selected RF Micro Devises to power the Galaxy Note II. Traders will ponder if the move today starts a new chapter or just a rerun of previous failed rally attempts.

Out of the 22 research analysts covering the stock, nine give it a rating of “hold” and another 10 have a rating of “buy” or “overweight”. The average price target given by the consensus is $5.46.

RF Micro Devices designs and manufactures radio frequency components and semiconductor technologies used in mobile devices, cable television and defense and aerospace industries. The Greensboro, North Carolina, company was founded in 1991.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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