UPDATE: JMP Securities Reiterates On Knowles Corp Following Recent Industry Checks

September 17, 2014

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In a report published Wednesday, JMP Securities analyst Alex Gauna reiterated a Market Outperform rating on Knowles Corp (NYSE: KN), and raised the price target from $41.00 to $45.00.

In the report, JMP Securities noted, “Our increased optimism around business momentum and near-term outperformance prospects for the stock is primarily driven by the rising tide in demand from Asian handset OEMs that seem to be going from good to great as those smartphone makers make strides to catch up in terms of acoustic quality, also supported by what appears to be a promising early start to the iPhone 6 upgrade cycle, and indications that China Mobile is increasing its 2014 base-station deployment targets from 500K to 700K. Our more constructive stance is also driven by recent indications by the company and its primary competition that point to essentially unchanged market share prospects for 2014 and beyond, which is a view that we already maintained, but it is now in better focus given the commencement of holiday season manufacturing ramps, and engineering activity for 2015 models.

“We take further comfort in the consistency of: 1) cost savings actions that are expected to get Knowles to a 39% gross margin structure by 2016; 2) its ability and actions to remain the leader in MEMS microphones for the foreseeable future; 3) the increased content it is gaining in speaker modules; 4) efforts to increase its acoustic entrenchment through software and new feature development; and 5) the multi-quarter period of easy compares it is now entering into.”

Knowles Corp closed on Tuesday at $30.38.