Stocks To Watch: Cirrus Logic Inc. [NASDAQ: CRUS] was largely unaffected by Thursday’s market correction. The stock was up by 16.37% at market’s close, even as most stocks closed the day in the red. CRUS bullish momentum was the result of its strong Q1 results, and prospects of new growth opportunities in the future.
From the report, revenues dropped, but the EPS rose due to improved gross margins. Revenues from the company’s portable products dropped by around 4.4% compared to a year earlier. On the other hand, GAAP gross margin rose to about 51.4% from 48.9% a year earlier. Non-GAAP gross margins also rose from roughly 49% to 51.5%. This improvement in gross margins was driven by lower reserve expenses, as compared to the last fiscal year. The company also announced that it sees growth opportunities outside of the smartphone market.
The CEO stated that, they believe there is a future in audio and voice, and the company is well-positioned in this market. Diversification from smartphones is a big deal considering that Apple is the company’s largest customer, and accounts for 72% of revenues. This as the iPhone market seems to have hit a plateau, and Apple now looking into wearables as the next growth frontier.
From a look at the charts, Cirrus closed the day in gains, but it was already in a correction. It hit a high of $60 and closed the day at $57.08. This small pullback is likely from the selling pressure that hit the market in the latter part of yesterday’s session from the trade war news. As such, its price action today may be affected by market-wide price action.
Markets across the globe are in the red, and traders will be watching to see how U.S markets open. That’s after President Trump escalated the trade war with China with additional tariffs on Chinese goods. If the markets open in the red, it could impact on CRUS and other stocks in the day.