Tuesday, October 9, 2012

Chipmakers fall on Downgrades – AMD, AD, TXN, INTC, ISIL, POWI, MXIM

A couple of downgrades by brokerages sent shares of chip makers down on Monday.

Those which were affected were Texas Instruments Incorporated(NASDAQ:TXN), Intersil Corp(NASDAQ:ISIL), Analog Devices, Inc.(NASDAQ:AD )and Power Integrations, Inc.(NASDAQ:POWI).

ISI Group's Sumit Dhanda downgraded ratings of some of the chip companies saying that there were very little catalysts for a revival in the industry.

"Our prior constructive view was based on our belief that either 2H12 seasonality or improving economic conditions would spark a significant inventory refresh of a historically depleted supply chain, against the backdrop of a stable demand environment. With the window for a seasonal catalyst now increasingly behind us and several macro indicators continuing to weaken, a catalyst no longer appears imminent and the assumption of stable demand going forward appears increasingly in question," he said.

JP Morgan's Christopher Danely also echoed the sentiments of Dhanda but he was also bulish on certain stocks such as that of Texas Instruments and ON Semiconductor.

Dhanda cut ratings of Analog Devices, Linear Technology, Power Integrations and Texas Instruments to Hold from Buy.

 He maintained his Buy ratings on Intel Corporation(NASDAQ:INTC), Maxim Integrated Products Inc.(NASDAQ:MXIM), Altera, Broadcom and Xilinx.

Dhanda also cut Intersil shares to Sell from Hold and reduced the price target for the shares to $6 from $10 previously.

Meanwhile Danely also warned investors that they should expect softness in earnings in the quarter just gone. "Our checks indicate semiconductor demand was lower than expected during 3Q12 due to soft end market demand. As a result, we expect Consensus estimates to decline for most semiconductor companies during earnings season.”

He reduced his estimate for Intel and Advanced Micro Devices, Inc.(NYSE:AMD). He raised his rating on Maxim to Neutral from Underweight and he cut Intersil to Underweight from Neutral.

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