We are short shares of EZCH. Please click here to read full disclosures.
We believe that shares of EZchip Semiconductor Ltd. (EZCH) are highly overvalued.
Our full report is available here.
EZCH shares currently trade at $23.97, implying an egregious 7.5x 2013E EV/Revenue and a 32.5x GAAP P/E, surprising multiples for a business that has repeatedly demonstrated its inability to grow. As we frequently see in mispriced businesses, a high-level sector story – in this case the need for greater bandwidth on capacity constrained carrier networks – has steered investors into an overpriced stock with many idiosyncratic risks. We believe that investors are not properly assessing the competitive risks posed to EZchip’s business or the limits of the addressable market, especially in light of the EZCH’s astronomical valuation…