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Mentor Graphics (MENT) has a bullish Chaikin Power Gauge stock rating and reports its 1st quarter 2016 earnings before the opening on Friday May 22. MENT has reported positive earnings surprises for the past 8 quarters, although profit taking usually follows in the week after their earnings are reported.
Buy MENT, which recently triggered a Relative Strength Buy signal in Chaikin Analytics, ahead of Friday’s earnings report. Needham and Company recently reiterated a buy recommendation on Mentor Graphics and raised their price target from $26 to $28.
Mentor Graphics designs and manufactures electronic design automation software for the integrated circuit and systems design industries. Needham analyst Richard Valera cited solid 4th quarter 2015 results in their automotive and calibration businesses but noted weakness in their emulation software lines.
Mentor is addressing this softness with a restructuring plan that will pare 4% from its workforce. An IP lawsuit against Synopsys (SNPS) was recently resolved in MENT’s favor, eliminating one potential source of competition in the emulation business. Mentor recently announced the Nucleus real time operating system for next-generation wearable embedded devices for medical, fitness, security and safety applications. This new operating system will power management software that will increase wearable battery life.
Their entrance into the currently hot wearable market along with Wall Street buy recommendations has resulted in positive price action as seen in the above chart that shows MENT outperforming the overall market since late October. Friday’s update on their restructuring plans and their forward guidance will be a key driver if the stock is to break out above the $25.50 resistance area and achieve price targets up to $28.
Mentor Graphics has a bullish Chaikin Power Gauge stock rating driven by strong earnings growth, positive earnings surprises and a low price to projected earnings ratio. The Financial Metrics component is particularly strong with a low price to sales ratio, low price to book and positive ROE adding to a low debt to equity ratio.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
