CEVA stock: Up and to the right
In my not so unbiased opinion, CEVA has always been an underrated company, perhaps more so now than ever as the pace seems to be quickening toward the adoption of more advanced wireless communications technologies like LTE (one of the sweet spots of CEVA’s DSP technology offering). CEVA has a great business model, brand name customers, dominates its market for DSP IP, and targets application areas like 4G wireless, HD video processing and mobile multimedia that are all “up and to the right”. Plus, their traditional competitors, like TI in DSP, are de-focusing on that business as the world moves to more flexible, IP-based SoC design approaches.
Apparently Wall Street is listening anyway. The CEVA stock has enjoyed a real nice run up of late, surging to a 12-month high yesterday (April 14) to close at $29.79, up more than 10% on the day. The uptick was partly due to the fact that Barclays Capital initiated coverage of CEVA with an “Overweight” rating, but CEVA has been a nice growth story for awhile. Its stock price has doubled since last Fall and more and more analysts are starting to jump on the bandwagon of CEVA being “the ARM of mobile communications” story line.
Barclays noted three reasons for its recommendation. The company’s market share in the mobile handset market reached 36% in 2010, up from 12% in the first quarter of 2009, and Barclays expects it to reach 55% market share by the end of 2012. Secondly, Barclays sees CEVA as having an advantage in the new 4G market, because 4G is being designed into its products from the outset. The third factor Barclays cites is CEVA’s “solid financials,” with $131 million in cash and marketable securities and no debt.
All part of the solid foundation CEVA has built for long term growth. It’s share of the DSP IP market is north of 75%. It continues to announce impressive licensing wins, including wrestling a public statement out of Intel last fall that revealed the world’s #1 chip maker would be using CEVA’s latest technology for wireless applications (anyone in high tech PR can appreciate that accomplishment). Intel joins a bevy of other to players in 4G/LTE, multimedia processing and home entertainment apps who have chosen CEVA (including all of the top smart phone makers, even those that sell products beginning with a small i). The company has made great inroads into China, as well, and is well-positioned with top suppliers vying for lucrative China Mobile deals in the advanced wireless space.
CEVA is coming off a successful Mobile World Congress, its key event for the year, where all its latest offerings were on display, including, notably, its first real push into broadband infrastructure (after years of dominating at the device/handset level). Wired Island helped CEVA to be featured in an advance story in EE Times on what to see at MWC, and their CEO’s observations prove prescient.
The CEVA story is a fun one to tell and more people are starting to pay attention to it. But, alas, I have to kick myself for not picking up some of that CEVA stock last year when it was trading at around ten bucks a share!
