Fairchild Semicondutor's (NYSE:FCS) Street EPS Estimates Too Low Says FBR

While FBR sees Fairchild Semicondutor's (NYSE:FCS) performance in the fourth and first quarters pretty much in line with Street estimates, they believe EPS estimates for 2011 are too low.

FBR says, "Recent checks suggest Fairchild's 4Q revenues and 1Q revenue guidance will track largely in line with Street estimates, with some 4Q strength in handset industrial and automotive shipments, and with sluggishness in computing and consumer shipments. For 2011, however, we think the Street's EPS estimate of $1.36 is too low, with actual earnings power more likely at $1.50–$1.60 given our more constructive view on gross margins and operating expense spending. We believe the discretes subsector is an attractive area to invest within semiconductors given structural pricing and margin improvements (partially spurred by Fairchild's stricter pricing discipline), still-falling fab capacity (in contrast to ramping analog capacity), substantial investor skepticism, and attractive valuation metrics."

FBR Capital maintains an "Outperform" rating on Fairchild Semiconductor, which closed Wednesday at $15.68, even with the last close. FBR raised their price target on Fairchild from $20 to $22.