Maxim Prices $500M Senior Notes, Gets Moody's Baa1 Rating

Maxim Integrated Products, Inc. (NASDAQ:MXIM) recently announced the pricing of senior unsecured notes aggregating $500 million. These bonds carry a coupon rate of 3.450% and are due to mature in 2027. The offering is expected to close on Jun 15, 2017, subject to customary closing conditions.

Management stated that net proceeds from this offering would be used for general corporate purposes.

Merrill Lynch, Pierce, Fenner & Smith Incorporated will act as sole active book-running managers for the offering.

In the last six months, shares of Maxim outperformed the Zacks categorized Semi- Analog & Mixed industry. While the industry gained 20.9%, the stock returned 14.2%.

Moody's Rating

Maxim’s senior notes were assigned “Baa1” rating with a stable outlook by the leading credit rating agency Moody’s.

The rating was based on Maxim's strong business position across its high-performance analog portfolio. Moody’s remains encouraged by the company’s broad geographic reach and end-market diversification. Maxim remains financially strong with convincing margin expansion opportunities through its cost-saving initiatives and R&D focus on high-return investments.

Also, the rating agency believes that Maxim’s growing design wins in other areas will reduce its dependence on Samsung (KS:005930), thus lowering its problem of customer concentration. Moreover, Moody’s is encouraged by Maxim’ ability to repay debts on time.

Last Quarter Earnings

Maxim Integrated Products is an original equipment manufacturer (OEM) of semiconductor analog and mixed signal integrated circuits (ICs).

In the last reported fiscal third quarter, Maxim came up with adjusted earnings of 56 cents per share, ahead of the Zacks Consensus Estimate by 4 cents. Also, revenues of $581 million were up 5.5% sequentially and 4.7% year over year. The increase was driven by major strength in the automotive and industrial end markets.

Maxim also provided strong guidance for the fiscal fourth quarter of 2017. Revenues are expected in the range of $590–$630 million, while the Zacks Consensus Estimate is pegged at $599.30 million. Non-GAAP EPS is expected to be in the range of 59–65 cents. The Zacks Consensus Estimate stands at 62 cents.

Zacks Rank and Stocks to Consider

Currently, Maxim carries a Zacks Rank #2 (Buy). Other better-ranked stocks in the same space are Applied Materials (NASDAQ:AMAT) , KLA-Tencor (NASDAQ:KLAC) and Mercadolibre, Inc. (NASDAQ:MELI) each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Applied Materials delivered a positive earnings surprise of 3.35%, on average, in the trailing four quarters.

KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.

Mercadolibre, Inc. delivered a positive earnings surprise of 26.74%, on average, in the trailing four quarters.

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