Why Cirrus Logic Could Bounce Back

Cirrus Logic (NASDAQ: CRUS) shares have dropped more than 10% since its Aug. 2 first-quarter report despite the company topping Wall Street estimates. The audio-chip specialist's reliance on Apple (NASDAQ: AAPL) for the majority of its revenue turned out to be a double-edged sword.

Apple clocked better-than-expected iPhone sales in the latest quarter, which rubbed off positively on Cirrus' top line, as it gets around 76% of its revenue from its largest customer, which is presumed to be Apple. But at the same time, the uncertain production ramp-up schedule of the next-generation iPhones crushed Cirrus' hopes of issuing a sunny guidance.

Not surprisingly, Cirrus shares dropped almost 7% in post-earnings action. The stock has lost roughly 20% since since hitting a 52-week high in early June, as rumors of a delay in iPhone production have taken their toll. But does this drop in Cirrus' stock price make it a buy, or should investors brace for more downside?

Source: Fool.com