Cirrus Logic, Inc. (CRUS) is a provider of low-power, high-precision mixed-signal processing solutions. Earlier this week, the company delivered a better-than-estimated performance for the third quarter on both its top-line and bottom-line fronts.
Buoyed by robust product demand and contributions from the expanded high-performance mixed-signal content gains for smartphones, revenue increased 12.9% year-over-year to $548.3 million. This figure was better than estimates by $39.1 million. Meanwhile, Earnings per share at $2.54 exceeded estimates by $0.40.
With these developments in mind, let us take a look at the changes in Cirrus’ key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Cirrus’ top risk category is Finance & Corporate, contributing 24% to the total 42 risks identified. In its recent report, the company has added two key risk factors.
Under the Finance & Corporate risk category, Cirrus noted that its July 2021 acquisition of Lion Semiconductor entails a number of risks associated with integration, retaining key employees, and achieving envisaged revenue goals. If Cirrus fails to navigate these risks effectively, then its business and financials could see an adverse impact.
Under the Production risk category, Cirrus highlighted that it has a long-term capacity reservation and wafer supply agreement with GlobalFoundries. This obligates Cirrus to purchase wafers from GlobalFoundries through 2026.
If GlobalFoundries is not able to meet Cirrus’ product requirements, or conversely, if Cirrus’s manufacturing requirements differ from the numbers committed to GlobalFoundries, then Cirrus’ results of operations and financials could be negatively impacted.
Meanwhile, compared to a sector average of 15%, Cirrus’ Production risk factor is at 21%.
Hedge Fund Activity
According to TipRanks data, the Wall Street’s top hedge funds have increased holdings in Cirrus Logic by 48.8 thousand shares in the last quarter, indicating a positive hedge fund confidence signal in the stock based on activities of 5 hedge funds.
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