Barclays on Semiconductors And Equipment: Weekly Muse-ings: Previewing TXN, BRCM, NVLS, TER, MX, KLAC, AMD, CODE

Barclays on Semiconductors And Equipment: Weekly Muse-ings: Previewing TXN, BRCM, NVLS, TER, MX, KLAC, AMD, CODE

Barclays analyst, C.J. Muse, said, "First Part of Semi Trade "Stabilization" Nearing an End? We continue to see two stages within the current semi recovery. First is stabilization, where double-dip is no longer a concern and stocks are bid up - we think we are here now. The second is the rate of recovery, and here our expectations are a bit more subdued where we only expect a gradual WW economic recovery leading to semi growth of +2-5% in 2012. To this end, focus in the next month will likely be more on rate of recovery/relative valuation, and we think this could weigh on shares over the very near term. But then assuming end-demand data points show signs of strength supporting better-than-seasonal semi demand in 1H12, we look for semis to rally into year end. Our top picks remain Qualcomm (Nasdaq: QCOM), Broadcom (Nasdaq: BRCM), and Intel (Nasdaq: INTC) in semis and ASML (Nasdaq: ASML) and Lam (Nasdaq: LRCX) in SPE."

"What's on Tap This Week? Earnings reports from TI (NYSE: TXN), BRCM, Novellus (Nasdaq: NVLS), Teradyne (NYSE: TER), MagnaChip (NYSE: MX), KLA-Tencor (Nasdaq: KLAC), AMD (NYSE: AMD), and Spansion (Nasdaq: CODE). We have adjusted our estimates with the following changes to price targets: AMD to $5 from $8, CODE to $18 from $25, and MX to $10 from $16."

"TXN - NSM not in Street Numbers, but Recent Outperformance Likely Done...BRCM - Consensus Long, Set up for Near-term Weakness?: While BRCM remains one of top picks, we do see potential near-term risk as we expect revenue guide of flat to down slightly (consensus +3%)...CODE - Still an Underappreciated Story: With embedded NOR more like commodity
analog than commodity DRAM, we think investors will be surprised by the resilience of earnings. We model trough earnings of annualized $1+ and overall EPS of $1.75 in CY12 fueled by better GM and reductions to interest expense. With shares at 13x trough and <8x CY12 EPS, we continue to think risk is clearly higher for shares...AMD - Few Surprises Expected: Given negative pre-A, we expect few surprises with investors focused on yields at GF. We continue to prefer INTC for PC exposure...SPE - Looking for Outperformers: We believe investors will continue to look past likely 4Q misses, and focus on 4Q/1Q inflection - here we look for KLAC to guide orders flat to slightly higher, TER to remain profitable as it bounces along the bottom, and for FormFactor (Nasdaq: FORM) to see weakness in DRAM."

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