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Technology Stocks : ADI: The SHARCs are circling! -- Ignore unavailable to you. Want to Upgrade?

To: Jim Oravetz who wrote (1193)	2/4/1999 8:06:00 AM
From: Jim Oravetz	Read Replies (1) \| Respond to of 2882

Semiconductor Stocks Chip Away at Values - Good Press on ADI By CAROLYN WHELAN Shares of major semiconductor manufacturers, like technology stocks in general, have been great performers since last fall: Investors who got on board then have watched stocks of market leaders like Intel Corp. and Texas Instruments Inc. nearly double in value. But some say there's still money to be made from makers of specialty chips -- tailor-made semiconductors for flourishing markets like wireless and high-speed communications. Although some of those stocks are off their highs, the markets these companies serve are projected to grow at an annual rate of at least 25% for the next few years, according to Dataquest. The biggest player on this field -- at least based on stock market value -- is Analog Devices Inc., which has a total market capitalization of $4.9 billion. Analog's stock got pummeled last year when it missed its quarterly earnings forecasts twice. (For instance, after posting earnings that were six cents below consensus estimates in its April quarter, the shares plummeted by 18%.) But especially as the industry begins to turn around, some say the beating was undeserved. "Unless they can't walk and chew gum, they should recover," declares David Wu, an analyst with ABN Amro, which rates the stock Outperform. Drew Peck, a technology analyst at SG Cowen, calls Analog "underrated" and has a Strong Buy recommendation on the stock. "It's an East Coast company, which makes it a pariah in most circles," he says -- and he isn't kidding, either. Dan Myers, an analyst at Lehman Brothers, considers it a "very, very good company," and one that "TI's modeling itself on." Analog Devices makes analog components for today's simple gadgets and digital parts for tomorrow's gizmos. Analog processing, which accounts for three out of every four dollars of the company's sales, is still vital for translating digital signals, and it's expected to show strong growth, especially in areas like power management. The company now gets more than half its revenue from high-growth areas like computers, communications and consumer electronics. And the valuations look compelling. The stock is 25% off its 52-week high and at Tuesday's closing price of 28 1/8 traded at around 20 times this year's estimated earnings of $1.43 a share, according to First Call. That's much less than its projected earnings growth rate of 38% in 1999 and about on a par with its expected long-term growth rate.