Chip Concerns Appear Overblown: Report
07.11.06
Investors' fears that semiconductor stocks will continue to be flat are overblown, according to a Monday report by Banc of America Securities.
The research firm's top picks in the sector are Texas Instruments, Microchip and Intel.
"A cyclical recovery through 2006 should drive sales and earnings higher," wrote Sumit Dhanda, the author of the report and an analyst for Banc of America. "Our ratings suggest an 'overweight' position."
While chip stocks outperformed early in the year, they've been relatively flat for the past few months, the analyst said.
The reason?
"A litany of concerns ranging from options backdating, to slowing economic growth, to an inventory build have affected the stocks," said Dhanda.
Yet because inventory is still relatively lean, and because the stocks looked poised to meet expectations, the analyst said these fears are exaggerated.
"We think the current sell-off offers an attractive entry point for investors," Dhanda said.
forbes.com |
