Cirrus Logic downgraded by KeyBanc on Apple concerns

Cirrus Logic (CRUS) fell 2.2% in premarket trading on Thursday as KeyBanc Capital Markets downgraded the semiconductor company, citing concerns about cuts to Apple's (AAPL) iPhone units.

“AAPL cuts indicate iPhone units are likely to decline in 2027,” KeyBanc analyst John Vinh wrote in a note to clients. “[Roughly] 80% of the company’s revenues are tied to AAPL, with AAPL cutting wafer starts at TSMC on the order of 15M-20M iPhones. While we don’t think iPhone units will decline 5-10% next year, it’s pretty clear AAPL is taking a more conservative outlook on iPhone units over the next year, which suggests units will be flat to down slightly. As such, CRUS growth prospects appear limited over the next 6-12 months.”

Vinh lowered his rating on Cirrus Logic to Sector Weight from Overweight.

Delving deeper, the analyst said the company's opportunity in PCs, which he called “emerging,” has likely been pushed out due to rising memory prices.

“This was originally expected to be a meaningful diversification opportunity for CRUS and expected to reach 10% of revs over the next few years. Despite meaningful share gains within this segment, this diversification product cycle is likely to be put on hold until the memory environment normalizes.”

The analyst also weighed in on the recent news that Cirrus confirmed it had bid for Synaptics (SYNA), which is being acquired by Onsemi (ON).

“While we understand the motivation and potential synergies of a CRUS/SYNA combination, we still think this is a bit of a stretch from a strategic standpoint, which gives us pause in regards to whether there may be some fundamental concerns surrounding the core business,” Vinh added.