InvenSense Shares Popped: What You Need to Know

Brian D. Pacampara, The Motley Fool
Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of motion-processing chip-designer InvenSense (NYS: INVN) climbed 13% on Friday after the company's quarterly results easily topped Wall Street expectations.

So what: The third-quarter beat was so wide -- adjusted EPS of $0.13 versus the consensus estimate of just $0.06 -- that analysts are being prompted to raise their growth expectations on the stock. "During our fiscal third quarter, we marked two significant milestones," said CEO Steven Nasiri. "[F]irst, we announced the World's Smallest Dual-Axis Gyroscopes for Optical Image Stabilization in SmartPhones, and second, we began revenue shipments of our integrated 6-axis MPU-6050 products."

Now what: Don't let today's rally keep you from looking into the stock. In fact, Oppenheimer raised their price target on InvenSense to $15 per share on the expectation that it will benefit from Microsoft's looming release of Windows 8 and smart TVs. Buying into a hot stock with a high P/E isn't exactly ideal, but given the juicy growth potential of motion processing technology, InvenSense might be one of those stocks that will always seem expensive.

Interested in more info on InvenSense?Add it to your watchlist.

At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. The Fool owns shares of InvenSense and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter servicesfree for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.

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