Shares of Xilinx Inc. dropped 6.3% in morning grade Tuesday, after running up to a 16 1/2-year high the day before, after Wells Fargo downgraded the chip maker, citing concerns over valuation given the "modest" sales growth outlook. Analyst David Wong cut his rating to market perform, after being at outperform since October 2014. After attending Xilinx's analyst day Monday, Wong said he agreed with management's belief that the company will continue to gain market share in the programmable logic device market over the next few years, but the company's fiscal 2018 sales outlook implies "modest" growth of 6%, which suggests the rest of 2017 could be below current projections of double-digit growth for the global integrated circuit market. The stock had shot up 13% since Xilinx reported fiscal fourth-quarter results in late April to close Monday at $67.52, the highest close since Nov. 15, 2000 and above Wong's price target of $66. Separately, Susquehanna Financial analyst Christopher Rolland said that while Xilinx's analyst day was "constructive," it "lacked meaningful 'game chancing' announcements" to compel him to change his neutral rating or $60 stock price target. Xilinx's stock is still up 4.8% year to date, while the PHLX Semiconductor Index has climbed 17.1% and the S&p 500 has gained 7.0%.
Continue Reading Below
Copyright © 2017 MarketWatch, Inc.