CSR, the chipmaker whose products are used in smartphones by Nokia and other suppliers, has fallen back after a broker downgrade.
In its annual report issued today, the company said it remained cautious about the strength of the economic recovery but said demand for its products was expected to continue growing. This was not enough to explain a near 4% fall in its shares, down 18.3p at 466p. The real damage was done by comments from UBS, which although not overly negative, has trimmed its recommendation:
We downgrade CSR to neutral on valuation grounds following the recent strong share price performance. We have increased our price target to 540p to incorporate the recent currency moves, but we believe valuation is approaching fair value levels.
And after its recent acquisition of SiRF, UBS thinks more purchases may follow in due course:
CSR arguably made one of the best acquisitions in tech hardware when it bought SiRF, diversifying the stand alone BT risks. We believe CSR will adopt a pragmatic approach to shareholder returns but may look at further acquisitions over time.
UBS has also downgraded rival chipmaker Arm - down 4.6p at 222.6p - from buy to neutral:
Following Arm's strong fourth quarter results and inclusion into the FTSE 100, the stock has performed robustly. While we maintain our view that it remains one of the best companies in the sector based on secular trends, at the current level, we believe Arm needs to grow into its multiples.
