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Cypress: Apple, Other ‘Catalysts’ Largely Played Out, Says Barclays

Curtis trimmed his estimates for next year, anticipating further competition in USB-C chips.

The Street has baked in the AAPL impact to numbers (we est. $0.35 across IP8/X models) but USB-C is a standards based space and should get more competitive over time. IoT should continue to be a positive (Nintendo switch just upsided further) aided by the exit of players such as MRVL from the low-end.

Aside from USB-C, things he was counting on have pretty much “played out,” at this point, such as margin improvement, leaving less to look forward to:

IoT has more than outperformed our initial expectations (+40% from Q416) and should continue to be a driver but growth should moderate. CY achieved its GM target (43%) a quarter early but we see risk to next year’s 48% target as its fabs are already fairly full and memory pricing is not having as much of a benefit as we would like. Net net, while we think that management has a done an impressive job implementing the CY 3.0 strategy and CY still has interesting opportunities in IoT and USB-C, we don’t like the risk/reward vs. other names.

He sees "better areas for outperformance from here” in other stocks, though he doesn’t mention any specific names.