Nomura Securities on Semiconductors: How Much Recovery Is Priced In; Warming Up To Linear Tech
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Rating Summary:
1 Buy, 16 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
1 Buy, 16 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Nomura Securities on Semiconductors: How Much Recovery Is Priced In; Warming Up To Linear Tech (Nasdaq: LLTC)
Analyst, Romit Shah, said, "We continue to believe 2012 will be a recovery year for semis. Our data indicates that current consensus has semis revenues under-shipping end demand by 13% in Q1. At the same time, we believe end demand is improving as the durable goods data recently indicated that electronics sales increased from down 12% YoY in Jan to 0% growth in Feb. We estimate NTM earnings for select analog and PLD names by assuming revenue growth exceeds normal seasonality by 5% per quarter from Q2 to Q4-12 and target operating margins exiting the year. If 2013 is a peak year for earnings, we estimate stocks have almost 20% downside, assuming trough multiples (10x on average). Linear’s screens well in this analysis and also backs our view that higher-quality names could outperform in the second quarter."
"We believe the current environment of low (but rising) GDP and inventories is favorable for stocks but would be more constructive on a pullback. Our top longs are Avago (Nasdaq: AVGO), Broadcom (Nasdaq: BRCM) and Cypress Semi (NYSE: CY) and our top shorts are Altera (Nasdaq: ALTR), Texas Instruments (NYSE: TXN), and Marvell Technology (Nasdaq: MRVL)."
Analyst, Romit Shah, said, "We continue to believe 2012 will be a recovery year for semis. Our data indicates that current consensus has semis revenues under-shipping end demand by 13% in Q1. At the same time, we believe end demand is improving as the durable goods data recently indicated that electronics sales increased from down 12% YoY in Jan to 0% growth in Feb. We estimate NTM earnings for select analog and PLD names by assuming revenue growth exceeds normal seasonality by 5% per quarter from Q2 to Q4-12 and target operating margins exiting the year. If 2013 is a peak year for earnings, we estimate stocks have almost 20% downside, assuming trough multiples (10x on average). Linear’s screens well in this analysis and also backs our view that higher-quality names could outperform in the second quarter."
"We believe the current environment of low (but rising) GDP and inventories is favorable for stocks but would be more constructive on a pullback. Our top longs are Avago (Nasdaq: AVGO), Broadcom (Nasdaq: BRCM) and Cypress Semi (NYSE: CY) and our top shorts are Altera (Nasdaq: ALTR), Texas Instruments (NYSE: TXN), and Marvell Technology (Nasdaq: MRVL)."
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