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Shares of Cirrus Logic (NASDAQ:CRUS) jumped more than 20% Monday after Barclays analyst Blayne Curtis upgraded the stock all the way to "Overweight" from "Underweight." Curtis also increased his price target for the chip maker's shares from $18 to $28. For perspective, even after today's pop, Cirrus stock currently sits just below $23 per share.
Why it's happening
The call comes after Curtis moderated a discussion with Cirrus CEO Jason Rhode at Barclays' own annual Global Tech Conference last week. To explain his rationale, Curtis said he believes the revenue from Cirrus' chips sold into Apple's iPhone "6s" model next year could rise to a range of $2.50 to $3.50 per phone, up from roughly $2 per device today. Better yet -- and keeping in mind Apple currently generates more than 80% of Cirrus' sales -- Curtis also speculates Cirrus is likely to win business with Samsung in its next high-end flagship smartphones, presumably a reference to Samsung's Galaxy S6.
Both developments, he says, would stem at least in part from Cirrus' ability to leverage its low-power digital signal processor technology to enable "always on voice" commands. This would enable a power-efficient way for next-gen devices to constantly "listen" for user commands regardless of whether they're plugged into an external power source, as opposed to only receiving voice queries when activated by the user. Either way, bullish investors are understandably happy to have converted a notable market bear to their view.
Steve Symington owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Cirrus Logic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.