On Tuesday, Cirrus Logic Inc. (NASDAQ:CRUS) shares surged 3% in the morning hours before pulling back later for a net gain of about 1.16%. The spike came after Barclays analysts upgraded the CRUS stock from equal-weight to overweight citing opportunities in Android for both audio and power.
The analysts also expect the company to benefit more from its partnership with Apple amid content gains over the next two or three years.
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Analyst Blayne Curtis said Cirrus Logic is witnessing growth in audio after Maxim Integrated and NXP Semiconductor NV (NASDAQ:NXPI) shifted focus from consumer to industrial. And Curtis now sees similar trends shaping up in the power segment of Cirrus Logic’s business.
Cirrus Logic shares look attractive at the current valuation
From a valuation perspective, Cirrus Logic shares seem attractively valued at a forward P/E ratio of 15.14, making the stock a compelling option for value investors. Moreover, analysts expect its earnings per share to grow by 37.20% this year and at an average annual rate of about 9.90% over the next five years.
As a result, growth investors could find it exciting, thereby boosting the stock price. Therefore, although the stock has gained more than 50% over the last 12 months, CRUS could extend current gains amid its compelling valuation and growth prospects.
Is a breakout next after the rebound?
Technically, Cirrus Logic shares appear to be attempting a breakout from a consolidative triangle formation. The stock price recently bounced off the trendline support to surge towards the resistance level. As a result, it is now trading closer to the overbought levels of the 14-day RSI.
Therefore, investors will be targeting potential breakout profits at approximately $86.14 or higher at $89.10. On the other hand, if the shares pullback after hitting overbought conditions, the stock could find support at around $80.66 and $77.81.
It is not too late to bet on the CRUS stock bull run?
In summary, although Cirrus Logic shares seem closer to hitting overbought conditions, the stock still looks potentially undervalued based on current valuation multiples. Moreover, at the current price of about $83.00 per share, the stock trades at a discount based on analyst price targets.
Therefore, it could be time to invest in Cirrus Logic ahead of its exciting growth story.
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