CEVA (CEVA) Q2 results and guidance were modestly above consensus, while management highlighted positive dynamics in low-end smartphones and a recently announced AI licensing partnership, UBS Securities said Monday in a report.

CEVA forecast Q3 revenue of $30.5 million to $34.5 million, with 88% gross margin and operating expenses of $22.5 million to $23.5 million, UBS said. Management expects 2026 revenue growth of 13% to 15%, compared with its prior expectation of 12%, the report said.

UBS expects gains by UNISOC, a major supplier of smartphone chipsets, along with the 4G-to-5G transition and normal handset seasonality, to support CEVA in H2, while memory pricing remains a headwind.

CEVA's new AI partnership is expected to generate multi-quarter revenue from IP, software and services, with royalties potentially beginning in mid-2028, the report said.

UBS expects $146 million in 2027 revenue and EPS of $0.90, including $7 million to $10 million of Apple-related royalty revenue.

UBS maintained its buy rating on CEVA stock and its $48 price target.

Price: 30.73, Change: -1.20, Percent Change: -3.74