CEVA Q2 earnings preview: expect results in line with global growth, outlook to be soft
“Hold” the 8.375% 12/17 at 97.5 or a Z-spread of 735 bps. Prefer to stay away from the rest of the structure at present
Ceva is set to release Q2 results on Monday. In light of the Euro crisis and the Japan tragedy (though management indicated minimal impact from the latter in the Q1 call), we expect a modest y-o-y growth at best, particularly due to softness in the auto end-markets and strong Q2/10 comparatives, offset to some extent by a more resilient consumer sector. We also expect higher prevailing costs, particularly fuel, to pressure margins. We are looking for revenues of c. EUR 1.7 bn and Adjusted EBITDA in the range of EUR 70-75 mn. We anticipate a favourable effect on debt from a weaker USD when translated into EUR given that a large proportion of Ceva’s debt is in USD. Leverage is expected to remain high. with net leverage between 6x and 6.5x. We expect the company to provide a softer outlook in light of the EUR crisis, the on-going MENA issues and slowing growth in the US. We retain our “High Risk” assessment on the LARA scale.
“Hold” the 8.375% 12/17 at 97.5 or a Z-spread of 735 bps. Prefer to stay away from the rest of the structure at present
Ceva is set to release Q2 results on Monday. In light of the Euro crisis and the Japan tragedy (though management indicated minimal impact from the latter in the Q1 call), we expect a modest y-o-y growth at best, particularly due to softness in the auto end-markets and strong Q2/10 comparatives, offset to some extent by a more resilient consumer sector. We also expect higher prevailing costs, particularly fuel, to pressure margins. We are looking for revenues of c. EUR 1.7 bn and Adjusted EBITDA in the range of EUR 70-75 mn. We anticipate a favourable effect on debt from a weaker USD when translated into EUR given that a large proportion of Ceva’s debt is in USD. Leverage is expected to remain high. with net leverage between 6x and 6.5x. We expect the company to provide a softer outlook in light of the EUR crisis, the on-going MENA issues and slowing growth in the US. We retain our “High Risk” assessment on the LARA scale.