GM/All,
<<Bold emphasis mine>> I must admit that I'm surprised at the 12-month price targets of $95 for INTC?!?! We could be there this fall.
Analysts bullish on chip stocks
Group gains 4.5 percent on global developments
By Binti Harvey, CBS MarketWatch
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."ÿ
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. Intel's high-end business
should benefit from the increase in higher-priced PCs. Wu added that he
expects the company to report an upside surprise in the third and fourth
quarters as industry fundamentals improve.
Adding to the upbeat mood regarding chip stocks, CS First Boston
analyst Alan Rieper initiated coverage of seven semiconductor companies
with buy and strong buy ratings. Rieper started Xilinx Inc. (XLNX),
Maxim Integrated Products Inc. (MXIM), Linear Technology Corp.
(LLTC) and Microchip Technology Inc. (MCHP) with "strong buy"
ratings. Lattice Semiconductor Corp.(LSCC), Cypress Semiconductor
Corp. (CY) and STMicroelectronics Inc. (STM) received "buy" ratings.
Positive global development also boosted the group. One of Taiwan's
largest chipmakers, Taiwan Semiconductor Manufacturing Co., said that
although sales declined 16 percent year-over-year, revenue increased
from the previous month.
A plan by South Korea's major memory chip manufacturers may also help
alleviate oversupply. The country's three biggest memory companies will
temporarily stop production in August in order to stimulate demand and
raise prices.
NationsBanc Montgomery Securities analyst Jonathan Joseph is bullish on
the group. "Markets have firmed up in China, the U.S. and Europe, and
we have sharp cutbacks in capacity additions, which is the first step to
reaching a bottom."
"We like semis. We believe we're setting a bottom here and conditions are
going to improve going into the fall and the next two years," Joseph said |
