We reduce our 12-month target price to $191 from $204, based on an above peer P/E of 39.8x our FY 24 (Mar.) view, which we initiate at $4.81, to reflect the pending Advanced Micro Devices acquisition. We increase our FY 22 estimate to $4.34 from $4.05 and keep FY 23 at $4.52. XLNX posts Dec-Q EPS of $1.29 vs. $0.78, beating the $1.02 consensus. Shares currently trade at about an 8% discount to AMD's stock price based on deal terms as we await necessary approval from China. The deal is seen closing by the end of March. Sales grew 26%, better than expected, led by a 35% increase from advanced products while core products grew a paltry 3%. Data Center revenue surged 81%, driven by compute and networking strength. We believe the platform transformation remains a bright spot, with total Adaptive SoC revenue (includes Zynq and Versal platforms) up 30% and about 28% of sales. Supply constraints had a negative impact on the Wired and Wireless Group, which witnessed an 18% sequential drop (up 1% versus prior year).
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