Barclays on U.S. Semiconductors: Q3 Preview: Expect Lower Guidance from Most, Wireless a Bright Spot
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Up: 12 | Down: 15 | New: 40
Rating Summary:
3 Buy, 12 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Barclays on U.S. Semiconductors: Q3 Preview: Expect Lower Guidance from Most, Wireless a Bright Spot
Barclays analyst, Blayne Curtis, said, "We believe that the majority of our semi names will report September results at the bottom of the range and provide lower guidance for the December quarter. While expectations heading into this earnings period are obviously fairly low as we did see several companies (i.e. Fairchild (NYSE: FCS)) rally off of weak guidance last week, we would hesitate buying all cuts. With a more tempered growth environment next year, we believe investors will realize that many semi names look expensive even after business snaps back. We are sticking with our small basket of secular names (Avago (Nasdaq: AVGO), Atmel (Nasdaq: ATML), Cypress (NYSE: CY), Cavium (Nasdaq: CAVM), Skyworks (Nasdaq: SWKS), and Volterra (Nasdaq: VLTR) for 2012 as we believe these are the names that will be able to deliver growth next year even in a slow growth environment."
"Wireless the One Bright Spot - Samsung Still Going Strong: Our checks suggest Samsung smartphone production (both high end and low end) was very strong in Q3 (up over 50% Q/Q) and that continues in Q4 (up another 10-15% Q/Q). We believe Samsung is looking to take share given the struggles at LG, RIM, and Nokia (NYSE: NOK). The key is obviously whether or not Samsung will pull back production in Q4 as it has in the past - so far so good. Our names likely to see a tailwind from Samsung include�Atmel and Cypress in touch, Skyworks and RF Micro (Nasdaq: RFMD) in RF, and Maxim (Nasdaq: MXIM) in audio/power."
"Conviction Calls: Into the print, we believe Silicon Labs (Nasdaq: SLAB) and TriQuint (Nasdaq; TQNT) are the most likely to disappoint as Q4 expectations are actually fairly high and we expect both to deliver guidance below consensus. We see Avago, Atmel, Cavium, Cypress, Skyworks, and Volterra as the best names for 2012 and would be looking to buy on any weakness."
Barclays lowers PT on Overweight rated ATML from $16 to $14. FY11 EPS estimate cut from $0.75 to $0.71 and FY12 from $0.88 to $0.67.
Lowers PT on OW rating CAVM from $42 to $40. FY11 EPS estimate cut from $1.22 to $1.17 and FY12 from $1.34 to $1.28.
Lowers PT on OW rating CY from $25 to $20, cuts FY11 EPS estimate from $1.28 to $1.21 and FY12 from $1.56 to $1.30.
Lowers PT on OW rating VLTR from $30 to $27, cuts FY11 EPS estimates from $1.18 to $1.04 and FY12 from $1.76 to $1.54.
Barclays analyst, Blayne Curtis, said, "We believe that the majority of our semi names will report September results at the bottom of the range and provide lower guidance for the December quarter. While expectations heading into this earnings period are obviously fairly low as we did see several companies (i.e. Fairchild (NYSE: FCS)) rally off of weak guidance last week, we would hesitate buying all cuts. With a more tempered growth environment next year, we believe investors will realize that many semi names look expensive even after business snaps back. We are sticking with our small basket of secular names (Avago (Nasdaq: AVGO), Atmel (Nasdaq: ATML), Cypress (NYSE: CY), Cavium (Nasdaq: CAVM), Skyworks (Nasdaq: SWKS), and Volterra (Nasdaq: VLTR) for 2012 as we believe these are the names that will be able to deliver growth next year even in a slow growth environment."
"Wireless the One Bright Spot - Samsung Still Going Strong: Our checks suggest Samsung smartphone production (both high end and low end) was very strong in Q3 (up over 50% Q/Q) and that continues in Q4 (up another 10-15% Q/Q). We believe Samsung is looking to take share given the struggles at LG, RIM, and Nokia (NYSE: NOK). The key is obviously whether or not Samsung will pull back production in Q4 as it has in the past - so far so good. Our names likely to see a tailwind from Samsung include�Atmel and Cypress in touch, Skyworks and RF Micro (Nasdaq: RFMD) in RF, and Maxim (Nasdaq: MXIM) in audio/power."
"Conviction Calls: Into the print, we believe Silicon Labs (Nasdaq: SLAB) and TriQuint (Nasdaq; TQNT) are the most likely to disappoint as Q4 expectations are actually fairly high and we expect both to deliver guidance below consensus. We see Avago, Atmel, Cavium, Cypress, Skyworks, and Volterra as the best names for 2012 and would be looking to buy on any weakness."
Barclays lowers PT on Overweight rated ATML from $16 to $14. FY11 EPS estimate cut from $0.75 to $0.71 and FY12 from $0.88 to $0.67.
Lowers PT on OW rating CAVM from $42 to $40. FY11 EPS estimate cut from $1.22 to $1.17 and FY12 from $1.34 to $1.28.
Lowers PT on OW rating CY from $25 to $20, cuts FY11 EPS estimate from $1.28 to $1.21 and FY12 from $1.56 to $1.30.
Lowers PT on OW rating VLTR from $30 to $27, cuts FY11 EPS estimates from $1.18 to $1.04 and FY12 from $1.76 to $1.54.
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