Ratings on shares of Fairchild Semiconductor (NYSE:FCS), Healthways Inc. (NASDAQ:HWAY), ON Semiconductor (NASDAQ:ONNN), Charles Schwab (NYSE:SCHW) and URS Corp. (NYSE:URS) were reiterated by analysts.
Deutsche Bank (NYSE:DB) reiterated a “hold” rating on Fairchild Semiconductor (FCS). They have a price target of $18 on the company.
FBR Capital Markets reiterated an “Outperform” rating on Healthways Inc. (HWAY). They have a price target of $19 on the company. Up from $17.
Deutsche Bank reiterated a “Buy” rating on ON Semiconductor (ONNN). They now have a price target of $15 on the company.
FBR Capital Markets reiterated a “Market Perform” rating on Charles Schwab (SCHW). They have a price target of $20 on the company.
FBR Capital Markets reiterated an “Outperform” rating on URS Corp. (URS). They have a price target of $60 on the company.
Showing posts with label Fairchild Semi. Show all posts
Showing posts with label Fairchild Semi. Show all posts
Saturday, May 14, 2011
Monday, January 24, 2011
On Semi (Nasdaq:ONNN) Preferred Over Fairchild Semi (NYSE:FCS) Says Canaccord
After Fairchild Semi (NYSE:FCS) faltered in their latest quarter, Canaccord says they prefer On Semi (Nasdaq:ONNN) over them at this time.
Canaccord said, "Fairchild Semiconductor International stumbled on mixed Q4/10 results. EPS came in at $0.45, ahead of expectations and Q4/09, while revenue of $397.7 fell short of the consensus. European sales led the way, increasing 15% from the prior quarter while sales in North America, Korea and the Asia Pacific declined. Fairchild saw growth in the automotive, industrial and appliance end markets (PICA Product Group), but this was offset by a decline in the MCCC Product Group due to weaker than expected demand in computing. Executive Vice President and CFO Mark Frey provided sales guidance for Q1/11 of $400.0-405.0 million, ahead of the consensus $388.6 million, and estimates gross margins to be flat or down 100 bps (midpoint 36.6%). Canaccord Genuity Technology Analyst Bobby Burleson believes higher R&D spending associated with new products is likely to hamper operating margin expansion in 2011 unless the company generates better than expected revenue growth. He is estimates that Q1/11 revenue will come in at $383.4 million and gross margins at 35.3%. Burleson remains neutral on Fairchild and continues to prefer On Semiconducter (Nasdaq: ONNN) saying it is the best way to play a shallower than expected inventory correction for analog semiconductors."
On Semiconductor closed Friday at $10.85, dropping $0.22, or 1.99 percent. Fairchild Semiconductor closed Friday at $16.24, losing $0.02, or 0.12 percent.
Canaccord said, "Fairchild Semiconductor International stumbled on mixed Q4/10 results. EPS came in at $0.45, ahead of expectations and Q4/09, while revenue of $397.7 fell short of the consensus. European sales led the way, increasing 15% from the prior quarter while sales in North America, Korea and the Asia Pacific declined. Fairchild saw growth in the automotive, industrial and appliance end markets (PICA Product Group), but this was offset by a decline in the MCCC Product Group due to weaker than expected demand in computing. Executive Vice President and CFO Mark Frey provided sales guidance for Q1/11 of $400.0-405.0 million, ahead of the consensus $388.6 million, and estimates gross margins to be flat or down 100 bps (midpoint 36.6%). Canaccord Genuity Technology Analyst Bobby Burleson believes higher R&D spending associated with new products is likely to hamper operating margin expansion in 2011 unless the company generates better than expected revenue growth. He is estimates that Q1/11 revenue will come in at $383.4 million and gross margins at 35.3%. Burleson remains neutral on Fairchild and continues to prefer On Semiconducter (Nasdaq: ONNN) saying it is the best way to play a shallower than expected inventory correction for analog semiconductors."
On Semiconductor closed Friday at $10.85, dropping $0.22, or 1.99 percent. Fairchild Semiconductor closed Friday at $16.24, losing $0.02, or 0.12 percent.
Thursday, January 20, 2011
Fairchild Semi (NYSE:FCS), ON Semi (Nasdaq:ONNN), Intl Rectifier (NYSE:IRF) Still Attractive to FBR
Saying they remain constructive on the overall discretes sector, with a focus on Fairchild Semi (NYSE:FCS), ON Semi (Nasdaq:ONNN) and Intl Rectifier (NYSE:IRF), FBR doesn't see the inventory narrative as having as big as impact on the three as some believe.
FBR says, "We remain constructive on shares of FCS and the entire discretes sector as industry consolidation and improving mix initiatives should continue to benefit FCS, ON Semi (Nasdaq:ONNN), Intl Rectifier (NYSE:IRF), and others in coming years. While industry ship-ahead risks exist for all, including discrete and power management suppliers, we think valuations are still reasonably attractive versus normalized levels, and that any coming inventory correction will be very short lived as absolute inventory levels remain reasonably lean. For Fairchild specifically, we believe the firm’s mix-up story is happening and that the firm will achieve structurally higher margins in coming quarters and years given key customer exposure and improving product offering initiatives. Additionally, shares remain attractively priced, with prospects for meaningfully improved earnings power in 2012 and 2013. Finally, we think management could institute a share repurchase plan and/or a dividend plan in coming quarters, with the outside possibility that another chip firm or a private equity firm could make a bid for FCS given its very high free cash flow yield."
FBR Capital reiterates an "Outperform" rating on Fairchild Semi (FCS), which was trading at $16.05, down $0.68, or 4.06 percent, as of 1:29 PM EST. ON Semi was trading at $11.02, losing $0.20, or 1.78 percent. Intl Rectifier was at $30.04, down $0.75, or 2.44 percent.
FBR says, "We remain constructive on shares of FCS and the entire discretes sector as industry consolidation and improving mix initiatives should continue to benefit FCS, ON Semi (Nasdaq:ONNN), Intl Rectifier (NYSE:IRF), and others in coming years. While industry ship-ahead risks exist for all, including discrete and power management suppliers, we think valuations are still reasonably attractive versus normalized levels, and that any coming inventory correction will be very short lived as absolute inventory levels remain reasonably lean. For Fairchild specifically, we believe the firm’s mix-up story is happening and that the firm will achieve structurally higher margins in coming quarters and years given key customer exposure and improving product offering initiatives. Additionally, shares remain attractively priced, with prospects for meaningfully improved earnings power in 2012 and 2013. Finally, we think management could institute a share repurchase plan and/or a dividend plan in coming quarters, with the outside possibility that another chip firm or a private equity firm could make a bid for FCS given its very high free cash flow yield."
FBR Capital reiterates an "Outperform" rating on Fairchild Semi (FCS), which was trading at $16.05, down $0.68, or 4.06 percent, as of 1:29 PM EST. ON Semi was trading at $11.02, losing $0.20, or 1.78 percent. Intl Rectifier was at $30.04, down $0.75, or 2.44 percent.
Wednesday, January 19, 2011
Linear Technology (NASDAQ:LLTC) Too Pricey in Short Term
Linear Technology (NASDAQ:LLTC) has done a good job in sustaining their margins, but there are few, if any, catalysts in the short term to make them attractive to FBR.
FBR says, "Some bulls may point to long-term growth opportunities in industrial, automotive, and comm/networking, and industry-high margins. Bears may argue that the firm is already well run with few operational improvement initiatives, that margins are near a peak, and that the firm walks away from too much business (Apple (Nasdaq:AAPL), among others) so the firm may keep its margin structure intact. We find ourselves somewhere in the middle, apathetic on the stock given that Linear is not very inexpensive nor very growthy, and given our view that other chip stocks offer more upside returns (ON Semi (Nasdaq:ONNN), Maxim (Nasdaq:MXIM), Fairchild Semi (NYSE:FCS), Microsemi (Nasdaq:MSCC), Marvell (Nasdaq:MRVL)). We agree that further gross margin expansion opportunities are limited, with some Apple unwind a headwind in calendars 1Q11 and 2Q11. We thus prefer less-expensive chip stocks, product-cycle stocks, or fab-consolidation stocks. (FY11 EPS estimate lowered from $2.50 to $2.45)"
FBR Capital reiterates an "Underperform" rating on Linear Technology (LLTC), which was trading at $34.66, down $1.47, or 4.07 percent, as of 11:14 AM EST. FBR dropped their price target on Linear from $35 to $34.
FBR says, "Some bulls may point to long-term growth opportunities in industrial, automotive, and comm/networking, and industry-high margins. Bears may argue that the firm is already well run with few operational improvement initiatives, that margins are near a peak, and that the firm walks away from too much business (Apple (Nasdaq:AAPL), among others) so the firm may keep its margin structure intact. We find ourselves somewhere in the middle, apathetic on the stock given that Linear is not very inexpensive nor very growthy, and given our view that other chip stocks offer more upside returns (ON Semi (Nasdaq:ONNN), Maxim (Nasdaq:MXIM), Fairchild Semi (NYSE:FCS), Microsemi (Nasdaq:MSCC), Marvell (Nasdaq:MRVL)). We agree that further gross margin expansion opportunities are limited, with some Apple unwind a headwind in calendars 1Q11 and 2Q11. We thus prefer less-expensive chip stocks, product-cycle stocks, or fab-consolidation stocks. (FY11 EPS estimate lowered from $2.50 to $2.45)"
FBR Capital reiterates an "Underperform" rating on Linear Technology (LLTC), which was trading at $34.66, down $1.47, or 4.07 percent, as of 11:14 AM EST. FBR dropped their price target on Linear from $35 to $34.
Maxim (Nasdaq:MXIM), Marvell (Nasdaq:MRVL), ONNN (Nasdaq:ONNN), National Semi (NYSE:NSM), Fairchild (NYSE:FCS), Int'l Rectifier (NYSE:IRF), Microsemi (Nasdaq:MSCC), Broadcom (Nasdaq:BRCM) Have Most Semi Upside
With earnings reports from a number of semiconductor companies to be released next week, FBR focused on a number of companies in the sector, saying Maxim (Nasdaq:MXIM), Marvell (Nasdaq:MRVL), ON Semiconductor (Nasdaq:ONNN), National Semi (NYSE:NSM), Fairchild (NYSE:FCS), Int'l Rectifier (NYSE:IRF), Microsemi (Nasdaq:MSCC) and Broadcom (Nasdaq:BRCM) have the most upside potential of the group.
FBR says, "Several chip firms report earnings over the next week, including Linear Technology (Nasdaq:LLTC)(UP) Tuesday AMC, Fairchild Semi (FCS)(OP), Thursday BMO, Maxim Integrated (MXIM)(OP) Thursday AMC, AMD (NYSE: AMD)(MP) Thursday AMC, and Texas Instruments (NYSE: TXN)(OP) Monday AMC. For near-term focused investors, we think FCS and MXIM could see solid share price appreciation following beat and raise results, with TXN also possibly in that camp (though our conviction is slightly lower). While both MXIM and FCS have appreciated meaningfully in the near term, robust results and still-attractive stock valuations keep us favorable near term. For AMD, while the firm could post solid 1Q11 guidance, the departure of former CEO Dirk Meyer is likely to weigh on the stock and overshadow any near-term results until a full-time successor is found. For Linear, we think the firm's core business remains solid; however, several headwinds are present in the March quarter, including (1) a possible loss of one of its two iPad sockets (we estimate content going from $2 to $1) and some iPad seasonality in March, driving a roughly $10M revenue headwind in total (three revenue points), and (2) tougher comparisons against the firm's 14-week December quarter (about four revenue points). For Texas Instruments, we think the firm will report robust results and guidance, and the stock could possibly rally, though we prefer MXIM (growth) or NSM (value) versus TXN currently. Finally, for ON Semi (ONNN–OP), we are raising our 4Q10 revenue and EPS estimates slightly toward the high end of guidance, embedding Sanyo into our financial estimates, and raising our price target from $15 to $16."
"While the group could see some profit-taking following such a move higher, we do expect some beat and raise 4Q10 results and thus think any sell-off will be short term in nature and a likely buying opportunity for later in 2011. Our favorite stocks for upside include Maxim (Nasdaq: MXIM), Marvell (MRVL), ONNN, National Semi (NSM), Fairchild (FCS), Int'l Rectifier (IRF), Microsemi (MSCC), and Broadcom (BRCM)."
FBR says, "Several chip firms report earnings over the next week, including Linear Technology (Nasdaq:LLTC)(UP) Tuesday AMC, Fairchild Semi (FCS)(OP), Thursday BMO, Maxim Integrated (MXIM)(OP) Thursday AMC, AMD (NYSE: AMD)(MP) Thursday AMC, and Texas Instruments (NYSE: TXN)(OP) Monday AMC. For near-term focused investors, we think FCS and MXIM could see solid share price appreciation following beat and raise results, with TXN also possibly in that camp (though our conviction is slightly lower). While both MXIM and FCS have appreciated meaningfully in the near term, robust results and still-attractive stock valuations keep us favorable near term. For AMD, while the firm could post solid 1Q11 guidance, the departure of former CEO Dirk Meyer is likely to weigh on the stock and overshadow any near-term results until a full-time successor is found. For Linear, we think the firm's core business remains solid; however, several headwinds are present in the March quarter, including (1) a possible loss of one of its two iPad sockets (we estimate content going from $2 to $1) and some iPad seasonality in March, driving a roughly $10M revenue headwind in total (three revenue points), and (2) tougher comparisons against the firm's 14-week December quarter (about four revenue points). For Texas Instruments, we think the firm will report robust results and guidance, and the stock could possibly rally, though we prefer MXIM (growth) or NSM (value) versus TXN currently. Finally, for ON Semi (ONNN–OP), we are raising our 4Q10 revenue and EPS estimates slightly toward the high end of guidance, embedding Sanyo into our financial estimates, and raising our price target from $15 to $16."
"While the group could see some profit-taking following such a move higher, we do expect some beat and raise 4Q10 results and thus think any sell-off will be short term in nature and a likely buying opportunity for later in 2011. Our favorite stocks for upside include Maxim (Nasdaq: MXIM), Marvell (MRVL), ONNN, National Semi (NSM), Fairchild (FCS), Int'l Rectifier (IRF), Microsemi (MSCC), and Broadcom (BRCM)."
Thursday, January 13, 2011
Maxim (Nasdaq:MXIM), ON Semi (Nasdaq:ONNN), Marvell (Nasdaq:MRVL), Broadcom (Nasdaq:BRCM), National (NYSE:NSM), Fairchild (NYSE:FCS), Intl Rectifier (NYSE:IRF), Microsemi (Nasdaq:MSCC) Have Best Potential Upside Says FBR
Commenting on the semiconductor sector, FBR said the companies with the most potential upside in their view are Maxim (Nasdaq:MXIM), ON Semi (Nasdaq:ONNN), Marvell (Nasdaq:MRVL), Broadcom (Nasdaq:BRCM), National (NYSE:NSM), Fairchild (NYSE:FCS), Intl Rectifier (NYSE:IRF) and Microsemi (Nasdaq:MSCC)
FBR said, "Here we discuss Maxim Integrated (Nasdaq: MXIM)(Outperform) and our latest 1Q11 production start checks. Regarding Maxim, the firm has seen meaningful success ramping analog baseband chips into CDMA phones from Samsung and LG, phones usually powered by Qualcomm baseband chips. With Apple's new CDMA-based iPhone about to launch, we cannot help but wonder if the innards of this device are similar to the innards of other CDMA-based handsets that often contain Maxim analog baseband chips. While we have not confirmed anything in this regard, it is possible Maxim's chips could be found inside the CDMA-based iPhone, instead of the power management unit currently designed in from Dialog. If 20M CDMA-based iPhones are built in 2011 with an analog baseband content of $2, then $40M of incremental revenues would be generated, contributing about $0.04 of annual EPS, a positive. Separately, we detail our updated production start checks, which were largely stable versus our prior month checks in aggregate, with production forecast improvements by Nvidia (Nasdaq: NVDA), Marvell (Nasdaq: MRVL), and Broadcom (Nasdaq: BRCM) largely offsetting production forecast cuts from Qualcomm (Nasdaq: QCOM), Texas Instruments (NYSE: TXN), Altera (Nasdaq: ALTR), and Atheros (Nasdaq: ATHR). Regarding chip stocks, while playing some defense may make sense following a big run higher since Labor Day, and given that CES has historically marked a peak in both chip stock prices and sentiment, we do think a "beat and raise" round of 4Q earnings results, improving economic (jobs and manufacturing) data, an inflow of cash from bonds to equities, and still-reasonable chip firm valuations (14x 2011 P/E for sector) may mean that any sell-off is short term in nature and a likely buying opportunity. Chip stocks remain cheap compared with software stocks, and compared with the overall market, especially in light of robust demand trends and structural growth opportunities. We think the SOX can grind higher toward 475–500 by year-end 2011. Stocks to focus on for potential upside include Maxim (Nasdaq: MXIM), ON Semi (Nasdaq: ONNN), MRVL, BRCM, National Semi (NYSE: NSM), Fairchild Semi (NYSE: FCS), Intl Rectifier (NYSE: IRF), and Microsemi (Nasdaq: MSCC)."
FBR added these points: 1) Maxim could win a power management socket in the new CDMA-based iPhone (though nothing is confirmed); possible $0.04 annual EPS impact; 2) 1Q production start checks largely stable and better than seasonal at flat QOQ; raises by NVDA, MRVL, and BRCM offset by cuts from QCOM, TXN, ALTR, and ATHR; 3) Commentary for firms that increased production forecasts; 4) Commentary for firms that decreased production forecasts; 5) Shares of Intel (Nasdaq: INTC) widely disliked—a potential opportunity, if Sandybridge ramp is robust.
FBR said, "Here we discuss Maxim Integrated (Nasdaq: MXIM)(Outperform) and our latest 1Q11 production start checks. Regarding Maxim, the firm has seen meaningful success ramping analog baseband chips into CDMA phones from Samsung and LG, phones usually powered by Qualcomm baseband chips. With Apple's new CDMA-based iPhone about to launch, we cannot help but wonder if the innards of this device are similar to the innards of other CDMA-based handsets that often contain Maxim analog baseband chips. While we have not confirmed anything in this regard, it is possible Maxim's chips could be found inside the CDMA-based iPhone, instead of the power management unit currently designed in from Dialog. If 20M CDMA-based iPhones are built in 2011 with an analog baseband content of $2, then $40M of incremental revenues would be generated, contributing about $0.04 of annual EPS, a positive. Separately, we detail our updated production start checks, which were largely stable versus our prior month checks in aggregate, with production forecast improvements by Nvidia (Nasdaq: NVDA), Marvell (Nasdaq: MRVL), and Broadcom (Nasdaq: BRCM) largely offsetting production forecast cuts from Qualcomm (Nasdaq: QCOM), Texas Instruments (NYSE: TXN), Altera (Nasdaq: ALTR), and Atheros (Nasdaq: ATHR). Regarding chip stocks, while playing some defense may make sense following a big run higher since Labor Day, and given that CES has historically marked a peak in both chip stock prices and sentiment, we do think a "beat and raise" round of 4Q earnings results, improving economic (jobs and manufacturing) data, an inflow of cash from bonds to equities, and still-reasonable chip firm valuations (14x 2011 P/E for sector) may mean that any sell-off is short term in nature and a likely buying opportunity. Chip stocks remain cheap compared with software stocks, and compared with the overall market, especially in light of robust demand trends and structural growth opportunities. We think the SOX can grind higher toward 475–500 by year-end 2011. Stocks to focus on for potential upside include Maxim (Nasdaq: MXIM), ON Semi (Nasdaq: ONNN), MRVL, BRCM, National Semi (NYSE: NSM), Fairchild Semi (NYSE: FCS), Intl Rectifier (NYSE: IRF), and Microsemi (Nasdaq: MSCC)."
FBR added these points: 1) Maxim could win a power management socket in the new CDMA-based iPhone (though nothing is confirmed); possible $0.04 annual EPS impact; 2) 1Q production start checks largely stable and better than seasonal at flat QOQ; raises by NVDA, MRVL, and BRCM offset by cuts from QCOM, TXN, ALTR, and ATHR; 3) Commentary for firms that increased production forecasts; 4) Commentary for firms that decreased production forecasts; 5) Shares of Intel (Nasdaq: INTC) widely disliked—a potential opportunity, if Sandybridge ramp is robust.
Wednesday, January 5, 2011
Fairchild Semiconductor (NYSE:FCS) Margins Should Expand Going Forward
Citing comments Fairchild Semiconductor (NYSE:FCS) management recently made, UBS (NYSE:UBS) said margins in the near and mid term should expand.
UBS said, "Based on recent comments by management, we believe that with improving product mix and operating model, FCS should continue to expand its margins in near to mid term. We raise our longer term operating margin assumption for FCS to 15% from 12% (vs. long term target of 20%) and we believe that FCS should be valued at a PE multiple closer to that of its peer group at - 16x...Our 2011 and 2012 Rev/EPS estimates of $1,675m/$1.62 and $1,763m/$1.88 are significantly above cons of $1,608m/$1.36 and $1,706m/$1.62."
UBS reiterates a "Buy" rating on Fairchild Semiconductor, which closed Tuesday at $15.92, gaining $0.25, or 1.60 percent. UBS raised their price target on them from $15 to $21.
UBS said, "Based on recent comments by management, we believe that with improving product mix and operating model, FCS should continue to expand its margins in near to mid term. We raise our longer term operating margin assumption for FCS to 15% from 12% (vs. long term target of 20%) and we believe that FCS should be valued at a PE multiple closer to that of its peer group at - 16x...Our 2011 and 2012 Rev/EPS estimates of $1,675m/$1.62 and $1,763m/$1.88 are significantly above cons of $1,608m/$1.36 and $1,706m/$1.62."
UBS reiterates a "Buy" rating on Fairchild Semiconductor, which closed Tuesday at $15.92, gaining $0.25, or 1.60 percent. UBS raised their price target on them from $15 to $21.
Thursday, December 30, 2010
Fairchild Semicondutor's (NYSE:FCS) Street EPS Estimates Too Low Says FBR
While FBR sees Fairchild Semicondutor's (NYSE:FCS) performance in the fourth and first quarters pretty much in line with Street estimates, they believe EPS estimates for 2011 are too low.
FBR says, "Recent checks suggest Fairchild's 4Q revenues and 1Q revenue guidance will track largely in line with Street estimates, with some 4Q strength in handset industrial and automotive shipments, and with sluggishness in computing and consumer shipments. For 2011, however, we think the Street's EPS estimate of $1.36 is too low, with actual earnings power more likely at $1.50–$1.60 given our more constructive view on gross margins and operating expense spending. We believe the discretes subsector is an attractive area to invest within semiconductors given structural pricing and margin improvements (partially spurred by Fairchild's stricter pricing discipline), still-falling fab capacity (in contrast to ramping analog capacity), substantial investor skepticism, and attractive valuation metrics."
FBR Capital maintains an "Outperform" rating on Fairchild Semiconductor, which closed Wednesday at $15.68, even with the last close. FBR raised their price target on Fairchild from $20 to $22.
FBR says, "Recent checks suggest Fairchild's 4Q revenues and 1Q revenue guidance will track largely in line with Street estimates, with some 4Q strength in handset industrial and automotive shipments, and with sluggishness in computing and consumer shipments. For 2011, however, we think the Street's EPS estimate of $1.36 is too low, with actual earnings power more likely at $1.50–$1.60 given our more constructive view on gross margins and operating expense spending. We believe the discretes subsector is an attractive area to invest within semiconductors given structural pricing and margin improvements (partially spurred by Fairchild's stricter pricing discipline), still-falling fab capacity (in contrast to ramping analog capacity), substantial investor skepticism, and attractive valuation metrics."
FBR Capital maintains an "Outperform" rating on Fairchild Semiconductor, which closed Wednesday at $15.68, even with the last close. FBR raised their price target on Fairchild from $20 to $22.
Wednesday, December 15, 2010
QUALCOMM (Nasdaq:QCOM), Broadcom (Nasdaq:BRCM), Atheros (Nasdaq:ATHR), LSI (NYSE:LSI), National Semi (NYSE:NSM), ON Semi (Nasdaq:ONNN), Fairchild (NYSE:FCS) Look Good Going into 2011
FBR Capital gave their outlook for the chip sector going into 2011, and still see it performing strongly, although probably less than the last several quarters. Favorites in the sector include QUALCOMM (Nasdaq:QCOM), Broadcom (Nasdaq:BRCM), Atheros (Nasdaq:ATHR), LSI (NYSE:LSI), National Semiconductor (NYSE:NSM), ON Semi (Nasdaq:ONNN), Fairchild (NYSE:FCS) and Microsemi (Nasdaq:MSCC), all of which have an "Outperform" rating on them from FBR.
FBR said, "We remain constructive on the chip sector for 2011 and think that semiconductor stocks can appreciate higher over the course of the year given (1) robust end demand for smartphones, tablets, infrastructure equipment, and industrial/automotive applications; (2) higher chip content per device in handsets, automobiles, and others; (3) still-reasonable channel inventories; (4) still-limited capacity growth, and (5) reasonably high earnings power. That said, chip stocks have had a powerful move higher since September, and thus could be subject to profit taking, a pullback, or at the very least some digesting to start the year. Indeed, 2010 saw a continuation of the substantial recovery that began in 2H09, and we see these positive demand trends continuing into 2011. While the chip cycle did "over-heat" some in 2010, likely driving 2011 semiconductor revenue growth to track flattish year over year given the 5–10 points of revenue replenishment good news that does not repeat in 2011, we still believe this is the sector's first ever "soft-landing." We do see some revenue- and EPS-related "ship-ahead" risks still for chip firms, particularly in the industrial and communications/networking sectors, and expect some misses from chip firms in these sectors in 1H11, though the magnitude of these resets should be modest. Valuations remain generally attractive for the group (though not as attractive as two to three quarters ago) and we see material upside in Outperform-rated stocks like QUALCOMM, Broadcom, Atheros, LSI, National Semi, ON Semi, Fairchild, and Microsemi."
QUALCOMM closed Tuesday at $49.18, up $0.06, or 0.13 percent. Broadcom closed at $44.98, down $0.72, or 1.58 percent. Atheros closed at $33.94, down $0.62, or 1.79 percent. LSI ended the day at $5.93, up $0.02, or 0.34 percent. National Semiconductor closed at $13.64, up $0.06, or 0.44 percent. Fairchild ended the session at $15.14, down $0.33, or 2.13 percent. Microsemi closed Tuesday at $23.59, down $0.71, or 2.92 percent.
FBR said, "We remain constructive on the chip sector for 2011 and think that semiconductor stocks can appreciate higher over the course of the year given (1) robust end demand for smartphones, tablets, infrastructure equipment, and industrial/automotive applications; (2) higher chip content per device in handsets, automobiles, and others; (3) still-reasonable channel inventories; (4) still-limited capacity growth, and (5) reasonably high earnings power. That said, chip stocks have had a powerful move higher since September, and thus could be subject to profit taking, a pullback, or at the very least some digesting to start the year. Indeed, 2010 saw a continuation of the substantial recovery that began in 2H09, and we see these positive demand trends continuing into 2011. While the chip cycle did "over-heat" some in 2010, likely driving 2011 semiconductor revenue growth to track flattish year over year given the 5–10 points of revenue replenishment good news that does not repeat in 2011, we still believe this is the sector's first ever "soft-landing." We do see some revenue- and EPS-related "ship-ahead" risks still for chip firms, particularly in the industrial and communications/networking sectors, and expect some misses from chip firms in these sectors in 1H11, though the magnitude of these resets should be modest. Valuations remain generally attractive for the group (though not as attractive as two to three quarters ago) and we see material upside in Outperform-rated stocks like QUALCOMM, Broadcom, Atheros, LSI, National Semi, ON Semi, Fairchild, and Microsemi."
QUALCOMM closed Tuesday at $49.18, up $0.06, or 0.13 percent. Broadcom closed at $44.98, down $0.72, or 1.58 percent. Atheros closed at $33.94, down $0.62, or 1.79 percent. LSI ended the day at $5.93, up $0.02, or 0.34 percent. National Semiconductor closed at $13.64, up $0.06, or 0.44 percent. Fairchild ended the session at $15.14, down $0.33, or 2.13 percent. Microsemi closed Tuesday at $23.59, down $0.71, or 2.92 percent.
Tuesday, December 7, 2010
Fairchild Semi (NYSE:FCS) Boosted to "Buy" from Janney Montgomery Scott
Saying that most of the issues related to credit for Fairchild Semi (NYSE:FCS) have been resolved, Janney Montgomery Scott bumped up their rating on them to a "Buy."
JMS said, "4Q10 results were below expectations on weakening credit and shares were down on the results. We are lowering our FY11 estimates to reflect the increase in non-accruals but believe the company has worked through most of its credit issues. We are raising our rating to BUY based on Fifth Street's strong NII growth potential and discount valuation to its peers. Our primary concern with the name has been the estimates below company's ability to grow the reflect our projected Net portfolio and drive NII in line with Interest Income (NII) per the dividend. Fifth Street has share significantly upgraded its infrastructure, adding both."
Fairchild closed Monday at $15.31, up by $0.29, or 1.93 percent. Janney has a price target of $12.50 on them.
JMS said, "4Q10 results were below expectations on weakening credit and shares were down on the results. We are lowering our FY11 estimates to reflect the increase in non-accruals but believe the company has worked through most of its credit issues. We are raising our rating to BUY based on Fifth Street's strong NII growth potential and discount valuation to its peers. Our primary concern with the name has been the estimates below company's ability to grow the reflect our projected Net portfolio and drive NII in line with Interest Income (NII) per the dividend. Fifth Street has share significantly upgraded its infrastructure, adding both."
Fairchild closed Monday at $15.31, up by $0.29, or 1.93 percent. Janney has a price target of $12.50 on them.
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