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Apple supplier getting crushed

November 1, 2012: 1:50 PM ET

http://i2.cdn.turner.com/money/dam/assets/121101044436-iphone-5-customer-blog.jpg

Investors are bailing out of Cirrus Logic (CRUS), the Apple (AAPL) supplier that just issued a strong earnings report and upbeat outlook.

So, what gives?

Well, early Thursday, Felt & Co. downgraded Cirrus' stock to hold from strong buy, citing gross margin concerns and pricing pressure headwinds. Felt analyst Jeffrey Schreiner also cut his price target on the stock by $10 to $44. He said Cirrus remain innovative over the long term but cautioned investors should 'take a breath' after the recent run-up.

Cirrus was trading around $36 on Thursday. But the stock is up a whopping 130% so far this year.

Many StockTwits traders thought the sell-off was overblown.

abubnic: $CRUS down 13.5% today despite stellar earnings report. Seems very unreasonable. Could retrace?

howardlindzon:$CRUS earnings fine, obviously some momo manager somewhere worried that $AAPL will mess with them as a supplier (long $AAPL)

The company, which makes microchips for Apple iPods, iPhones and iPads, gets 80% of its revenue from Apple so any changes to the supply chain agreement will impact Cirrus' bottom line too.

tickertutor: I'm betting $AAPL gonna get ruthless begin demanding lower ASP(s) to expand their product margins. Not good for $CRUS at this valuation.

That's exactly what Schreiner was cautioning about. But Canaccord analyst Bobby Burleson says the gross margin/pricing pressure worries are overdone. He reiterated his buy rating on Cirrus and kept a price target of $52 on the stock.

ivanhoff: It is not rare to see price to top before earnings. Remember, market is forward looking, but not always right of course $CRUS

nickgweezy:@LaMonicaBuzz @OptimistWilliam regardless, the sell-off in $CRUS is overblown. A beat and raise is a beat and raise.

Investors can be a fickle bunch. It seems like a little dose of reality is setting in. Yes, Cirrus has had a huge run-up. But maybe, just maybe, it can continue that trend.

mytfine: $CRUSanother example of loved name as late as last night that loses luster and just collapses. Tide turns quickly when algos flip to a sell

The stock has already started to claw back from steep losses as short covering appears to be kicking in.

ronin245: $CRUS finally getting small short covering bounce, took the fade last night dubl top at 45, even surprised me, $SNDK fade wasnt this good
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