Nomura Securities on U.S. Semiconductors: Q3 Earnings Preview - Second Round Of Cuts Are Usually Deeper
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Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Nomura Securities on U.S. Semiconductors: Q3 Earnings Preview - Second Round Of Cuts Are Usually Deeper
Nomura analyst, Romit Shah, said, "Based on our bear-case analysis, we see 10-20% potential downside to Q4 EPS. This is based in part on revenue growth that is 5-10% below normal seasonality of 1% growth. Our research indicates that industrial is among the weakest end markets from a bookings standpoint. We see this trend disproportionately impacting analog names such as Analog Devices (NYSE: ADI), Avago (Nasdaq: AVGO), Linear (Nasdaq: LLTC), and Texas Instruments (NYSE: TXN)."
"We recommend investors position defensively amid a challenging Q4 environment. We highlight the “Kings of Cash” as defined by net cash as a percentage of market cap, FCF as a percentage of sales, and dividend yield. The top quartile includes ADI, Xilinx (Nasdaq: XLNX), Microchip Tech (Nasdaq: MCHP), Maxim (Nasdaq: MXIM), and Qualcomm (Nasdaq: QCOM)."
"We are cautious on Linear Tech into earnings next Tuesday due to weakness in industrial and comm (65% of sales), consensus of 3% growth (vs our forecast of -5%), and valuation (14x ex cash). We are positive on shares of Broadcom (Nasdaq: BRCM) (Buy) near-term as connectivity (Apple (Nasdaq: AAPL)), baseband (Nokia (NYSE: NOK)), and tight op ex should sustain 2012 EPS above $3.00 (cons: $3.08). Maxim (Buy) is an overlooked play on smartphones, in our view, has minimal channel exposure, and a dividend yield near 4%."
Nomura analyst, Romit Shah, said, "Based on our bear-case analysis, we see 10-20% potential downside to Q4 EPS. This is based in part on revenue growth that is 5-10% below normal seasonality of 1% growth. Our research indicates that industrial is among the weakest end markets from a bookings standpoint. We see this trend disproportionately impacting analog names such as Analog Devices (NYSE: ADI), Avago (Nasdaq: AVGO), Linear (Nasdaq: LLTC), and Texas Instruments (NYSE: TXN)."
"We recommend investors position defensively amid a challenging Q4 environment. We highlight the “Kings of Cash” as defined by net cash as a percentage of market cap, FCF as a percentage of sales, and dividend yield. The top quartile includes ADI, Xilinx (Nasdaq: XLNX), Microchip Tech (Nasdaq: MCHP), Maxim (Nasdaq: MXIM), and Qualcomm (Nasdaq: QCOM)."
"We are cautious on Linear Tech into earnings next Tuesday due to weakness in industrial and comm (65% of sales), consensus of 3% growth (vs our forecast of -5%), and valuation (14x ex cash). We are positive on shares of Broadcom (Nasdaq: BRCM) (Buy) near-term as connectivity (Apple (Nasdaq: AAPL)), baseband (Nokia (NYSE: NOK)), and tight op ex should sustain 2012 EPS above $3.00 (cons: $3.08). Maxim (Buy) is an overlooked play on smartphones, in our view, has minimal channel exposure, and a dividend yield near 4%."
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