Cypress Semiconductor shares rise on reaction to 1Q results

The company reported profit above Wall Street expectations and signaled that it may spin off a major part of its lucrative solar business to Cypress shareholders.

Its shares rose $1.23, or 4.5 percent, to $28.60 in afternoon trading. The shares have fallen 21 percent since the start of the year and have traded in the last 12 months between $18.42 and $42.79.

Lehman Brothers analyst Tim Luke welcomed a favorable IRS ruling on the company's proposed sale to shareholders of its majority share in publicly traded solar company SunPower.

Cypress's first-quarter sales of $442 million beat his own estimate of $404 million, largely on the strong results from SunPower, Luke said in an investor note.

Citigroup analyst Glen Yeung welcomed Cypress' statement that it expects to post strong sequential growth in the second quarter.

Yeung raised his price target to $32 from $27 on the strong result.

The new price target represents a 12 percent premium on Cypress' Friday afternoon trading price.