Yesterday, Infineon reported FQ1 in line with expectations with EPS at EUR0.17 vs. EUR0.16 expected by the Street, however concerns raised due to low operating margin guidance for FQ2. Following the conference call, we remain confident about Infineon capability to leverage on International Rectifier acquisition and achieve FY16 guidance of a current operating margin of 16%. Given that this FY16 guidance has been confirmed, management’s cautiousness regarding Q2 anticipations (+3% sequential growth of sales and 13% margin) is positive in our view and gives room for good surprise. Overall, we see the long term story as unchanged. We reiterate our Buy recommendation.
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