Analysts bullish on chip stocks
Group gains 4.5 percent on global developments
cbs.marketwatch.com
NEW YORK (CBS.MW) -- Chip stocks rose Friday amid more indications the industry is making progress toward a turnaround.
The Philadelphia Semiconductor Index, which charts leading semiconductor issues, has risen 6 percent over the past two sessions on optimism that the group has hit bottom. Semiconductors were one of the first groups to participate in the market correction, and their recent turnaround has sparked hopes that the PC industry is back on track.
A report from the Semiconductor Industry Association late Thursday showed that semiconductor sales didn't drop as sharply in June as in previous months, which may mean industry fundamentals are improving. The organization reported that June global chip sales fell 14.1 percent year-over-year, and 2.2 percent sequentially. In May, sales fell 4 percent sequentially. June sales decreased 0.3 percent in the Americas, 1.9 percent in Europe, 3.6 percent in Japan and 3.7 percent in Asia-Pacific.
Friday morning, several analysts made bullish comments on chip companies. Lehman Brothers analyst Michael Gumport upgraded Intel Corp. (INTC) and Advanced Micro Devices Inc. (AMD) to "outperform" from "neutral," and raised C-Cube Microsystems Inc. (CUBE) and Alliance Semiconductor (ALSC) to "buy" from "outperform."
ABN Amro analyst David Wu also made positive comments on Intel, reiterating his "buy" recommendation and raising his 12-month price target to $95 from $90. Wu said memory chip manufacturers believe demand has risen for high-performance DRAM chips, which translates into increased production of high-end computers . . . .
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